As part of the plans for Making Tax Digital, from April 2017 HMRC intends to make adjustments to employees’ tax codes in as close to real time as possible so people pay the correct amount of tax within the tax year.

The PAYE system itself is not changing as such, but a number of modifications will be introduced. In summary, HMRC will use the information they have (eg, second employment, works pension, benefits in kind) pro-actively to change the PAYE coding more frequently so as to ensure the taxpayer pays the correct amount of tax through the payroll and that there will be less need for adjustments after the end of the tax year.