Dynamic PAYE coding – how is it affecting you?

In past news items, Making tax digital prompts more frequent code numbers and involves personal tax accounts published in April 2017and HMRC’s Agent Update issue 60 published in June 2017 we noted the imminent arrival of Dynamic PAYE Coding. This will now enable HMRC to make quicker use of RTI data to update tax codes.

Dynamic coding will mean more tax code changes to reduce the number of over- and under-payments at the end of the tax year, to be refunded/collected either in a code number or as a lump sum payment. Taxpayers who experience hardship as a result of having underpayments collected more quickly should contact HMRC to discuss spreading collection of the underpayment.

Please would you comment below on how Dynamic PAYE Coding is affecting you/your employees/your clients. Are you receiving more frequent code number updates and, most importantly, are code numbers accurate?

HMRC is encouraging taxpayers to visit their online personal tax account (PTA). In the PTA taxpayers can amend estimated income from employment and other sources and employment expenses (the latter are called ‘allowances’) for the current and following tax year, which should feed through to code numbers.

How easy do you find the PTA to use?

Taxpayers can access their PTA by logging onto www.gov.uk/personaltaxaccount and signing in using a Government Gateway (GG) ID and password. Taxpayers who do not already have a GG account can set one up straightaway. 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 phone each time they log in.

If you let us have actual examples of problems you have encountered we can use these in our future discussions with HMRC to help them make their new system work better. Please send details to peter.bickley@icaew.com  and include NINO and PAYE scheme reference numbers and what the code was and should have been.

  • We are a payroll bureau we are drowning in tax codes since this came in. We have 300 clients and we are downloading easily over 50 new codes every day, sometimes double that. Many of them are only moving a couple of points but most annoying is so many of them are on an M1/W1 basis so unlikely to get tax right at the end of the year.
  • i checked 4 new codes for clients today, all 4 were wrong. They had been updated following submission of 2017 tax returns or P11Ds and all seemed to have ignored various parts of what was submitted.
  • Chaos! Payment of a bonus in May has meant significant number of garbage codes. Individuals have tried amending online and are being put on M1 non cumulative codes. Out of pocket by literally £100s in month of impact. Someone not too bright has implemented this!
  • Employer - lots of new Tax Codes being received in our payroll dept, sometimes as many as 4 for one employee in a month - and all incorrect! HMRC need to look at this ASAP, otherwise there'll be uproar in the payroll world and many disgruntled or confused people out there!
  • These are extremely irritating and I will be charging clients for checking more than 1 or 2 of these a year.  The amount HMRC come up with for personal allowance should be broken down so it's clear how this has been calculated.  This would save having to call HMRC to go through it.  Last one included rental income from previous year plus estimate for this year so double counted the income.  Quite clearly wrong and HMRC operative has had to pass it on because he didn't understand.  Same for 'Adjustments for estimated tax you owe': needs to be broken down so we can see how this has been calculated.