Is your payroll department ready for the 2017 changes?
As part of its plans for Making Tax Digital, from April 2017 HMRC intends to make adjustments to employees’ tax codes in as close to real time as possible so people pay the right amount of tax within the tax year.
The PAYE system itself is not changing as such, but a number of changes will be introduced, including:-
HMRC will use the information it receives in a ‘more proactive way’ to ensure tax codes are more accurate; and
HMRC’s new approach to timely code adjustments will aim to keep tax completely up to date in the year so that more taxpayers pay the right amount of tax in the current tax year.
The first phase of the new regime will also enable HMRC further to change tax codes to collect any estimated in-year underpayment that arises as a result of the original change to a tax code. This should mean more taxpayers will pay the correct amount of tax for the year rather than being subject to post tax year underpayment or overpayment adjustments. However, the volume of coding notices is likely to increase because HMRC will have to change codes more often.
This could well mean questions to the payroll department on the reasons behind fluctuations in net pay.
Please contact David Hadley if you would like to arrange a no obligation meeting to discuss matters in connection with any corporate or business tax issues.
Date: 23rd February, 2017
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