We have noticed a worry trend over the last few months about the inaccuracy of Notice of Tax Codings that are issued by HM Revenue & Customs. The Notice of Tax Coding is designed to take account of factors that may require an employee to pay more or less tax as a result of a number of factors.
Things such as a second job, company cars, unpaid tax from previous years or other taxable benefits are common and are ‘coded in’ to ensure that there is no tax outstanding from one tax year to another. However, we have noticed that these NOTC are being used to ‘code in’ other income streams that are correctly dealt with through Self Assessment such as property rental and dividends.
In the majority of cases we have noted that the estimated amount of these additional income streams bears no resemblance to fact or what has been historically submitted As a result, those affected are overpaying tax on a monthly basis. There has been no change to the Self Assessment regime in this respect so tax payers are quite entitled to settle their taxes by 31st January as normal. There is no requirement to pre-pay via salary.
We would recommend that you review anyone who has a non-standard Notice of Tax Coding to ensure that the NOTC is based in fact or is at least a reasonable estimate to ensure there is no over-payment of tax.