HRMC manual: Tax codes

Purpose

This guidance is intended to inform employers of the necessary changes to tax codes, provide a clear process for updating these codes, and specify which tax codes should be carried forward into the new tax year on 6 April. The objective is to ensure that employers are aware of their responsibilities regarding tax code updates and can take the necessary steps to comply.

Effects on Industry

The update will have an immediate impact on employers who need to change tax codes for their employees. This may involve updating payroll systems, communicating changes to employees, and ensuring compliance with tax authorities. In the long term, this update is expected to improve the accuracy of income tax deductions and reduce administrative burdens associated with incorrect or outdated tax codes.

Relevant Stakeholders

Employers are directly affected by this update, as they must change tax codes for their employees and ensure that these changes are carried forward into the new tax year. This may also impact payroll software providers who need to update their systems to accommodate the new tax code changes. Employees will indirectly benefit from this update, as it is expected to improve the accuracy of income tax deductions.

Next Steps

Employers should take immediate action to review and update tax codes for all employees affected by the change. This may involve consulting with payroll software providers or seeking advice from tax authorities on how to proceed. Employers should also communicate changes to employees and ensure that they understand their new tax code details. To comply with this update, employers must have updated tax codes in place by 6 April.

Any Other Relevant Information

To facilitate the transition to new tax codes, tax authorities will provide guidance on which codes to carry forward and how to make necessary updates. Employers may also want to review their payroll systems to ensure that they are capable of handling the changes required by this update. It is essential for employers to remain vigilant in updating tax codes to avoid administrative burdens associated with incorrect or outdated tax codes.