TaxAdministrationHMRC overhauls PAYE coding system

HMRC overhauls PAYE coding system

Taxman brings in new system to cut out errors when working out how much tax free income individuals are entitled to

The taxman has brought in a new coding system to cut out errors in tax
payments.

Through Notices of Coding HMRevenue & Customs tells employers or pension

providers what tax-free income an individual is entitled to if any over the

tax year and, as a result, how much tax to deduct from income.

“As part of our drive to significantly improve the accuracy of our tax
and national insurance records HMRC has successfully introduced a new
single record of PAYE and tax details. This will mean that far fewer people

will pay too much or too little tax,” an HMRC spokesman said.

There are usually 12 million notices sent out but this will double to
24 million on a one-off basis as advisers are also informed.

“As a result of this more effective use of data HMRC needs to issue a
higher number of notices covering the 2010/11 tax year,” the spokesman
added.

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