Making tax digital prompts more frequent code numbers and involves personal tax accounts

HMRC has issued a briefing on changes to the PAYE system.

The briefing is made up of two papers. The first is Helping customers pay the right amount of tax on time and the second, shorter one is an employer information and support pack which explains changes that HMRC is making to the PAYE tax system. These can be shared by employers with their employees.

More frequent code numbers

The changes will not change the way in which employers submit PAYE RTI data but will result in employers receiving more notices of coding for employees. HMRC hopes that updating code numbers more frequently, using a variety of sources, will make the tax that employers deduct from pay more accurate and reduce the number of over or under-payments of tax that have to be sorted out in a subsequent year.

Personal tax accounts

A new source that HMRC will use to update code numbers is personal tax accounts for individual taxpayers. These online accounts will give every taxpayer a personalised picture of their tax affairs. Prompts, advice and support are intended to make it easy for taxpayers to check data on the account and make updates when their circumstances change (eg change of address, claiming employment-related expenses, claiming a tax refund), and are intended to help ensure that the right amount of tax is being paid.

Taxpayers can access their personal tax account by logging onto and signing in using a Government Gateway (GG) ID and password. Taxpayers who do not already have a GG account can set one up straight away. They should have to hand their national insurance number, a telephone number, and either a P60 or a payslip as certain details on these will be needed. These documents are needed only when signing up for the first time. Subsequently, all that is needed is the GG ID and password, plus an access code that will be sent to their mobile phone each time they log in.

The changes for employers/employees apply equally to pension providers/pension recipients.

This is just one aspect of Making Tax Digital. For more details of this change, see also our news item dated 10 January 2017 outlining HMRC’s plans to collect underpaid tax through tax codes a year earlier.

We would note that earlier editions of the employers information and support pack said that employers must submit PAYE RTI employer payment summaries (EPS) by the 12th of the month following the tax month concerned – this was an accidental slip as the deadline continues to be the 19th.


Note. This news item has been amended by the deletion of the word 'mobile' from the sentence 'They should have to hand their national insurance number, a telephone number, ...'

  • What if I'm on holiday overseas using a cheap holiday sim card?  My UK sim is too expensive to use overseas.

  • How do taxpayers sign up for a Personal Tax Account when they are not "employed" but "self-employed" and therefore have neither a payslip nor a P60?

  • Thank you Raju. Over enthusiastic editing introduced this error and the word 'mobile' has been deleted from this news item.

  • PAYE codes feed directly into employer systems.  The damage is usually done and pay reduced (or overpaid) before the taxpayer has any idea that a code has been issued.  Even if only 5% of codes which are applied are incorrect, that is thousands of taxpayers unable to correct the position before they are paid.  This is very worrying, especially for those who have multiple pensions and employments for which PAYE seems still to work poorly.  

    I also believe HMRC is being totally unrealistic in expecting people to use their tax accounts in the way they envisage.  People do not automatically think of notifying the 'taxman' when something happens.  HMRC does not seem to be able to use effectively the information it has now so I remain unconvinced that there will not be large numbers of taxpayers continuing to be issued with incorrect codes.

  • Doesn't HMRC understand there are many areas, such as where I live, which do not have any mobile network signal and are some miles from the nearest signal?