As part of the Government's plans to 'Make Tax Digital' (MTD), HM Revenue and Customs (HMRC) has introduced a new online Personal Tax Account system, which will bring an individual's tax details into one place so that they can register, file, pay and update their personal tax information online at any time.
In addition, HMRC are finally using the real time information we submit to make automatic adjustments to Pay As You Earn (PAYE) tax codes as they happen, rather than waiting until the end of the tax year.
Together these changes should offer far more certainty for employees, reduce unexpected tax bills and ensure more employees end the tax year having paid the correct amount of tax.
We are recommending that employers actively encourage their employees to sign up to their Personal Tax Accounts to enable them to take more control over their taxes and have the ability to:
- check Income Tax estimates and tax code notices, and see what their employer has reported
- set up paperless communications
- fill in, send and view a personal tax return if required to do so
- claim a tax refund
- check and manage tax credits
- check State Pension projections
- track tax forms that have been submitted online
- check or update Marriage Allowance
- tell HMRC about a change of address
- check or update employment benefits, for example company car details and medical insurance
More information on how to set up an online Personal Tax Account can be found here.
Sometimes employees can forget that their employer, or payroll provider if outsourced, receive any details as to what is included in an employee’s tax code – they only receive the coding number to apply.
It remains an employee’s responsibility to ensure their tax code is correct, but the introduction of the online personal account will now make checking tax codes easier, as well as identifying and quickly rectifying any errors within it. The online Personal Tax Account should be any employees first port of call if they have queries around their tax code.
Consequently, if an employee does use it, then it should also reduce the number of queries on tax codes employers have to deal with, allowing them to focus valuable time elsewhere.
In addition, having up to date personal details with HMRC is especially relevant given the difference between UK and Scottish tax rates and the requirement for employees to be on a Scottish tax code if they are deemed to be Scottish resident for tax purposes.
Remember also, when an employee’s address is changed on the payroll software and subsequent RTI submission, HMRC do not actually use this to update the details they hold on file and so it remains crucial for employees to notify HMRC of any change of address themselves. Again, this can be done via the online Personal Tax Account.
If you have any queries on the online Personal Tax Account or other time and cost saving initiatives for employers then please contact Charlotte Stewart, IES Manager, (firstname.lastname@example.org) or your usual AAB contact.