HMRC’s new dynamic coding has been in place since July 2017, but a problem has been identified which has changed its operation slightly.

HMRC is pushing ahead with its Making Tax Digital (MTD)agenda. Whilst the main implementation for corporation and income tax has been delayed, the first element of MTD is already here. Dynamic coding (or PAYE Refresh) was implemented from July 2017.

In theory, dynamic coding aims to speed up the collection of tax via PAYE code adjustments, partly by making use of real time information (RTI) submissions.

Depending on the amount of the underpayment, issues can arise where circumstances change, but the code is not adjusted until later in the tax year.

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