HMRC are advising
employees that between January and March
2010 they will be issuing new PAYE coding
for 2010/11. The tax codes should reflect
the individual’s personal circumstances
and include the tax allowances and reliefs
that individuals are entitled to.
HMRC are advising that this is the first
time the annual coding process will take
place using HMRC's new computer system for
processing PAYE, known as the National
Insurance and PAYE Service (NPS). HMRC are
expecting more employees than usual,
approximately 25 million, to receive
coding notices because of the new system.
However, it appears that there may be a
problem with the new coding notices,
according to the Chartered Institute of
Tax President Andrew Hubbard
“Most people on PAYE are used to
assuming that what the taxman sends them
is correct. Many file away coding notices
without even bothering to check them.”
“But this year, many of them are being
given wrong information, and unless they
spot it and tell HMRC, their employer will
receive the wrong information too, and
they could get a nasty shock when they
open their April pay packet and see it is
as much as a hundred pounds lighter than
they are expecting.”
According to the CIOT website
‘Those affected are thought to include
taxpayers who have left a job in the last
few years. The HMRC database appears to
have ‘lost’ the information it holds about
people leaving jobs and as a result is
combining taxpayers’ current employment
records with old data and concluding that
they have two (or more) jobs and much
higher earnings than they do.
Anyone with two jobs normally has their
personal allowance (the portion of your
income you do not have to pay tax on)
counted against the job with the highest
wage. As a result of the error many people
will, in effect, have their personal
allowance split between two jobs or
allocated to a job they no longer have,
meaning their current employer will be
obliged to deduct too much income tax. The
personal allowance will be £6,475 for most
people under 65 in 2010/11. If the whole
of that personal allowance is wrongly
applied that would cut a basic rate
taxpayer’s pay packet by about £108 a
month or £1,295 a year.’
If you receive a new tax code and are
unsure whether or not it is correct please
let us know so we can check it for you.
Internet links:
HMRC guidance on tax codes
Chartered Institute of Tax statement |
