HMRC publishes auto-coding guidance

HMRC has published guidance on auto-coding for tax agents preparing returns during Self Assessment season.

With auto-coding, the Revenue can automatically update a customer's PAYE tax code with information from their SA return. 

It was introduced for 2010-11 tax returns and is a quicker way of correcting tax codes to ensure clients pay the right amount of tax, according to HMRC.

Auto-coding uses information of other income and deductions from the return to calculate and issue a revised tax code for the current year.

Sending tax returns earlier will ensure that HMRC uses the right tax code, they stressed. 

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Comments

Child Benefit and PAYE Coding

Peter Tucker | | Permalink

Am I alone in thinking that HMRC should be utilising their expensive (cost over £118 million ) PAYE computer system to ensure that an appropriate PAYE Coding Deduction is calculated for anyone who would appear to be in receipt of Child Benefit and earning over the prescribed figure?

The estimate of the earned income for the new Tax year can easiy be calculated based on the known earned income supplied to HMRC each year.

The following web links make interesting reading?
http://hansard.millbanksystems.com/written_answers/1975/apr/29/family-allowance-deduction
http://hansard.millbanksystems.com/written_answers/1974/jan/25/family-allowances
http://hansard.millbanksystems.com/written_answers/1977/nov/15/family-allowances-1
http://www.theyworkforyou.com/debates/?id=1976-04-01a.1560.0
 

Interested in other's thoughts.

They don't know    2 thanks

David Heaton | | Permalink

The system won't work as you suggest, as there are no data (yet) on HMRC's system that link a CB recipient to a high earner.  To send out the warning letters, they did a cross-match on a rough basis between those earning at least £48k last year on the NPS/SA systems and those getting CB at the same address on the CB system, but relationships and addresses change, as do earnings.  The politicians who dreamt up the idea didn't think about the practicalities before they said what they were going to do.  It might get close to workable in a couple of years' time, once the first SA returns have been processed..