London: +44 (0)20 7236 2601
St Albans: +44 (0)1727 869141
Rickmansworth: +44 (0) 1923 771010
Milton Keynes: +44 (0)1908 605552

Tax codes

Dynamic coding is here; HMRC is now using Real Time Information (RTI) data from employers to recalculate employees’ tax codes. The RTI feed will be used to estimate earnings when a tax code review is triggered, for example when a new benefit in kind is notified. Where HMRC calculate that the new tax code will under collect tax for the remainder of the year an in-year restriction will be included in the tax code, aimed at collecting that estimated underpayment in the current year.  HMRC will also use other third party information, for example, from other government departments, with the aim to improve the accuracy of tax codes in-year and reduce the number of end of year underpayment and overpayment reconciliations required every year. Indeed, we are seeing aggressive coding adjustments in relation to estimated investment income even when asked not to via the self assessment return.

A key part of dynamic coding is that there are ‘trigger points’ for starting a review of an employee’s tax code. Trigger points are effectively notifications of change in circumstances. These can be a new employment, new benefit in kind, or perhaps an increase in salary. If HMRC are notified of details of a new company car, a tax code review is triggered and the tax code will be amended to include the benefit-in-kind that will arise in the tax year.




Date: 20th March, 2018
Author: Cathy Corns


Articles from this Author

Contact Business Service Partners

Choose from the drop down menu below to select a Partner to contact.


We sponsored the Rickmansworth Festival in support of the Rickmansworth Waterways Trust and to benefit the local co……

We will help you determine how best to prepare your business for Brexit. We are hosting a a seminar on Brexit: VAT……



For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole

Click here to follow us on LinkedIn