Understanding HMRC Tax Code Changes Under RTI
Under the Real Time Information (RTI) system, HMRC is making tax code changes more frequently based on employment and pension data reported by employers and pension providers.
These updates aim to reduce the number of overpayments and underpayments, ensuring that employees pay the correct amount of tax throughout the year.
How RTI Affects Tax Code Adjustments
Employers and pension providers submit real-time payroll data to HMRC every time they process payments. This allows HMRC to:
- Identify changes in income or employment.
- Adjust tax codes more frequently to prevent large discrepancies.
- Reduce unexpected tax bills at year-end.
While this should improve tax accuracy, frequent HMRC tax code changes may still lead to occasional errors. Employees should regularly check their tax codes to ensure they are correct.
Who Can Change a Tax Code?
It’s important to note that:
- Only the employee can request a tax code change if they believe it is incorrect.
- Employers and pension providers cannot make changes to tax codes on behalf of employees.
- Employees should contact HMRC directly if they notice an issue with their tax code.
This means taxpayers must stay informed and proactive in managing their tax affairs.
How We Can Help
Understanding HMRC tax code changes and ensuring accuracy can be challenging. At Lewis Brownlee, we help employees and pensioners resolve tax code issues and avoid unexpected liabilities. We pride ourselves on having leaders in the field of tax. So, whatever your tax concern, we are confident we can help. Plus, we offer a free introductory meeting so that you can meet one of our tax experts before you commit. It is important to know how we can help up front and we believe transparency is key to a healthy relationship. So, when you’re ready, we’re ready! Contact us today and let’s see how we can partner in your success!