Will Delaying the Issue of Tax Codes Affect Our Employees?

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HMRC have put forward a proposal to transform the way in which they issue a PAYE tax code to an employee. With the current system, HMRC will issue an employee with a PAYE code before informing their employer. The new system will mean that HMRC will issue the code to the employer first and delay the notice to the employee by up to 30 days.

Recently, The Association of Taxation Technicians (ATT) and The Low Incomes Tax Reform Group (LITRG) have criticised this proposal, which aims to relax the timeframe within which the revised PAYE codes are issued to employees throughout the country, claiming that the proposal is unnecessary.

Believing that it will lead to greater bureaucracy and confusion, the ATT has stated that it does not agree with the planned changes, which they feel will also have an adverse impact on employees by not allowing them the opportunity to check that their codes are correct before they are run.

Not Fixing the Real Issue

There seems to be a bigger issue that is being overlooked in this situation and that is the issue of many employees underpaying tax as a result of incorrect PAYE codes. This current proposal seems to undermine those problems and threatens to make them worse if an employee is unable to see their tax codes to confirm that they are correct.

The ATT feel that the mistakes that will undoubtedly be made to many employees tax codes will lead to an increase in queries and complaints made to the payroll bureaux as well as an increase in the amount of time that many employers will have to spend dealing with queries from their employees.

Understanding Your Role

Whether you are an employee or an employer it is important that you understand your role in these changes and have the knowledge that you need to ensure that no mistakes are made with regards to your tax code.

If you do receive your employee’s tax code then be aware that your employee may not have received it themselves. This proposal has not been put in place yet so there is still time to change it. HMRC have stated that they will not be issuing new codes to all tax payers, as many are not changing and doing so would just cause extra and unnecessary worry. They do believe that they are making the right decision in changing the process of issuing PAYE codes and feel that it will save the tax payer millions of pounds.

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