From 31 May 2017, employers and pension providers could receive more tax codes as a result of the change, but still on a batched basis as now. Regular PAYE real time information (RTI) submissions will continue unaffected.

If there is a change which affects an individual’s tax HMRC will send them a tax code change notice, along with instructions on what to do. This will explain the change, and encourage them to use their online personal tax account if they need more information or further support.

David Hadley, tax director at Mercer & Hole, said: ‘Tax codes that are sent to employers and pension providers should flow automatically into their computer systems, so any increase in the volume of notices (known as P6 notices) issued to employers and pension providers should not cause added administrative tasks for them.

‘However, the more frequent updates to PAYE could lead to an increase in employee queries as to the reasons behind fluctuations in net pay.’

HMRC claims that the new system will offer far more certainty by making incremental adjustments to tax payments. This will benefit an estimated eight million taxpayers who currently end the tax year having either over or under paid tax.

Of these two-thirds (5.5 miliion) overpay tax, of which just over 50% are the lowest paid, earning under £15,000 a year. HMRC says its new system, which forms part of the Making Tax Digital programme, will catch any overpayments sooner and prevent them from building up.

Meanwhile, HMRC says under the current system it can take up to two years for an individual’s tax account to be balanced after an underpayment has occurred. A smaller number of taxpayers, who previously would have had an unexpected bill at the end of the year, will pay the right tax from the moment their circumstances change, so they will be able to manage their tax payments better.

HMRC Policy paper Helping customers pay the right amount of tax on time is here.