In a rather innocuous press release, HMRC announced far-reaching changes to the PAYE system.
The reason for this, to quote HMRC, is that:
'The current system doesn't always work for customers whose circumstances change during the year:
- around 8 million customers underpay or overpay their tax each year
- two-thirds of these customers (5.5 million) overpay tax, of which just over 50% are the lowest paid, earning under £15,000 a year
- the current system can take up to two years for an individual's tax account to be balanced after an underpayment has occurred
These improvements will stop most people paying too much tax during the year or getting unexpected tax bills at the end of the year. They will now pay the right tax at the right time.'
It therefore appears that HMRC are proposing to change more PAYE codes in-year and code out over- and under-payments on a current year basis. This would be all well and good assuming that HMRC were 99% accurate in what they do. However, we all know that this is not the case. Recent issued that I have personally experienced with the PAYE system in the recent past include:
- Adjustments made in month 11 or 12 withdrawing the personal allowance as salary over £100,000 even though adjusted net income is below that figure. This is outrageous as there is little chance to amend the position before the end of the tax year.
- Numerous instances of codings changed but no coding notice sent.
- Long delays in posting coding notices after a coding change.
- The coding details in the personal tax account and HMRC's telephone operators are different.
HMRC state that the above issues are not common place and/or don't exist, which just goes to show! More in year coding changes means more putting right HMRC incompetence, so good luck from June 2017 when all of this starts.