Over the next few months HMRC will be busy issuing PAYE coding notices for employees confirming the PAYE codes to be used against their salary from the start of the new tax year on 6 April 2014. In some cases, taxpayers with relatively simple affairs will find that they no coding is received as their employer will simply be told to uprate their PAYE code to 1000L from 6 April, with this being the new standard tax code for the 2013/14 tax year. Taxpayers who receive benefits in kind or have job expenses will find that they will have a tax code that contains adjustments to either collect the tax due on the benefits in kind or to give them tax relief for their job expenses, as a result it will vary from the standard 1000L accordingly.
Some taxpayers may receive more than one tax code, particularly in cases where they have:
• Two or more jobs at the same time
• Income from two or more pensions, or
• Pension income and a job at the same time
If you receive a new PAYE coding notice for the new tax year and are unsure of what the notice means the following guide from HMRC’s website provides a useful overview: http://www.hmrc.gov.uk/incometax/understand-p2.htm
Going forward HMRC will no longer issue duplicate coding notices to your agent, if you have one, so you should ensure that you check your PAYE code to ensure that it is correct. We frequently identify errors in the PAYE codes issued by HMRC that could mean someone:
• is paying too much tax, or
• isn’t paying enough tax which will potentially lead to a nasty shock at the end of the tax year.
We would therefore strongly recommend that our clients forward copies of any notices received so that we can check they are correct.
Posted – 13/02/2014