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HMRC: new PAYE system to ensure you ALWAYS pay the right tax

John Fitzsimons
by Lovemoney Staff John Fitzsimons on 12 April 2012  |  Comments 7 comments

HMRC has launched a new real time PAYE system which it hopes will eliminate errors and ensure we always pay the right amount of tax.

HMRC: new PAYE system to ensure you ALWAYS pay the right tax

HM Revenue & Customs (HMRC) has launched a pilot version of a new Pay As You Earn (PAYE) system which it hopes will guarantee that we all pay the right amount of tax, first time.

The new system – Real Time Information (RTI) – requires employers to inform the taxman of PAYE payments as and when they are made, rather than leaving it all until the end of the tax year, as happens currently.

The idea is that it will now be easier for employers and pension providers to tell HMRC about their PAYE commitments, as the end-of-year PAYE returns process will be abolished, removing an admin burden costing as much as £300 million.

More importantly for you and me, the system should also ensure fewer mistakes are made, meaning fewer taxpayers will receive letters demanding extra tax payments months or even years after the event. That’s the plan anyway.

The pilot has launched with ten employers – including HMRC itself – with most employers to join the RTI scheme in April 2013, before all employers are on board by October 2013.

In the meantime, the best way to ensure you pay the right amount of tax is to keep on top of your tax code. We’ve detailed everything you need to know in How to make sure you’re on the right tax code.

What do you think? Is a real time system a sensible move? Will it cut out errors? Let us know your views in the comment box below.

More on tax:

Alcohol, cigarettes and diesel black markets cost us £28.5 billion!

Organise your paperwork for the new tax year

Tax and benefit changes for 2012/13

Where council tax is rising and falling next year

Six easy ways to pay less tax

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Comments (7)

  • PDB11
    Love rating 72
    PDB11 said

    Always pay the right tax? This is a joke, isn't it?

    Every year, I submit a tax return. Every year, I have extra tax to pay, because I have a property that I let out. Despite this, every year HMRC's response to my tax return is to reduce my PAYE coding by about two grand. Thus ensuring that I'll have a similar bill to pay next time.

    It doesn't matter how good the communication between my employer and HMRC may be, if HMRC cannot sort out their system for guessing how much tax I'm likely to have to pay, they will end up charging me the wrong amount. And I'll be stuck with a bill of a few grand in January, just as I am now.

    Report on 13 April 2012  |  Love thisLove  0 loves
  • Gezp
    Love rating 0
    Gezp said

    Good job we have a sense of humour. Took ages to sort my code out for 2012-13 then they didn't bother to inform my employer. Time the helpline was put on a freephone number, wasted best part of an hour trying to get to talk to someone. Very frustrating.

    Report on 13 April 2012  |  Love thisLove  0 loves
  • grelly
    Love rating 27
    grelly said

    Does this mean no more self-assessment? If so, about flaming time.

    Report on 13 April 2012  |  Love thisLove  0 loves
  • leah AKA global leah
    Love rating 21
    leah AKA global leah said

    HMRC has been sorting out my tax code for the last 8 years since I've started working, while I was temping, they were charging me emergency tax, which surprisingly only took them 3 years to repaid the tax that I was over paying. Then when they'd buggered up the whole country, they sorted it out last year by repaying what I'd overpaid... Now because of a new finding from one of the guys at work regarding claiming for washing your own uniform at home and can claim tax for that, I will get yet another repayment AND my tax code change again! When are they going to stop messing up and overcharging some people and under charge others?

    Report on 14 April 2012  |  Love thisLove  0 loves
  • SeaBee
    Love rating 15
    SeaBee said

    grelly. only if you have a single employer and all your income is PAYE.

    Report on 15 April 2012  |  Love thisLove  0 loves
  • elcadobes
    Love rating 9
    elcadobes said

    And pigs will fly. I used to take my tax code as correct, I have a salary and expenses from my P11D each year, so pretty simple. My brother asked me to check his tax code as it looked odd. I did and found it to be wrong. I then checked mine and found it to be wrong. I have Power of Attorney for my father and discovered his was wrong as well. This was four years ago. I phoned up and HMRC just changed the code with no argument, which I found a bit suspicious. The following year they were wrong again, this is the first year it is actually correct first time.

    Report on 18 April 2012  |  Love thisLove  0 loves
  • waggy142
    Love rating 11
    waggy142 said

    At the end of the last tax year (2010-11) I completed my tax return as usual and, on completion, was told that I had underpaid by £4.50. I, therefore, paid that amount and, a few weeks later I received a statement informing me that I had overpaid by £4.50, and a cheque was enclosed refunding that amount.

    A couple a weeks ago I received my coding notice for the new tax year in which I was told that I had underpaid for tax year 2010-11 by £4.50, and that my new tax code has been adjusted to allow for that. Need I say more?

    Report on 18 April 2012  |  Love thisLove  0 loves

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