As of 2nd July 2017 HMRC launched the new system of dynamic coding. This means that under the new system potential underpayments are replaced with in year adjustments (IYAs) Tax codes are adjusted in-year to reflect changes in an employee’s circumstances as soon as HMRC becomes aware of the change.

By using real time data HMRC will be able to change individual tax code in order to adjust, correct or collect any estimated in-year underpayment that arises as result of a change to their tax code. The change means more tax payer will end the year tax balanced and the number of PAYE overpayments or underpayments will reduce.

One of the benefits of this change means PAYE tax payers won’t have to wait until the end of the year for a refund.


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