HM Revenue & Customs (HMRC) is trialling a new trigger, which is intended to improve the accuracy of employees’ PAYE tax codes.
According to HMRC, as many as half a million tax codes being used by employers across the UK could be incorrect, leading to employees either overpaying or underpaying tax.
To address the problem, HMRC is making changes to dynamic coding, which began its rollout in July 2017.
Dynamic coding is designed to make use of the additional information HMRC is now receiving from employees and employers to recalculate pay estimates during the course of the tax year.
Now, HMRC is adding mismatches between its records and those held by employers, to the list of events that can trigger a recalculation.
As part of the initiative, HMRC is also placing a renewed emphasis on employers to ensure that they complete new starter checklists accurately and will be visiting the 100 worst offending employers who fail to complete the new starter process properly.
Oliver King, Payroll Manager at Milsted Langdon, said: “It is good to see that HMRC is improving the system for tax coding, but it has also made it clear that it will be tackling those employers who aren’t completing new starter checklists correctly. It is important that businesses are compliant in this area.”
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