HMRC have a recurring issue with individuals that have changes to their employment circumstances. Due to the “instantaneous” impact of PAYE, tax is deducted when you are paid, then if HMRC are unable to determine what allowances should be set-off against each employment, then under or over payments of tax may occur.

In the general run of things tax payers would not need to fill in a self-assessment tax return in order to advise HMRC if they have more than one employment or if they vary, add to or reduce, the benefits provided by an employer. However, all of these issues would need to be taken into account when Notice of Coding forms are issued to employers.

In an attempt to provide a simple means for taxpayers to communicate these changes, HMRC have decided to trial an internet based service, to be called PAYE Online. The idea is to provide a simple but secure way to advise HMRC of relevant changes in personal circumstances to ensure that the correct amount of tax is deducted under PAYE.

The new service is not to be considered a replacement for self-assessment. Self-employed individuals and those with more complex tax affairs will still have to complete a return. PAYE Online will also have no effect on employers’ obligations to submit payroll data to HMRC under the new RTI (Real Time Information) system.

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