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)

  • elcadobes
    Love rating 10
    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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