The Government is Making Tax Digital
The Making Tax Digital campaign is the Government’s attempt to bring all its digital systems up to date and under the one roof of the Government Gateway.
Using “dynamic coding” introduced in 2017, the Government now updates tax codes throughout the year in order to address any under or overpayments promptly. This is meant to reduce instances of taxpayers overpaying or having to wait until the end of the year to receive a refund, as the adjustments can be made by the Government straight away.
However, cracks are already beginning to appear.
If for example you receive a large bonus early in the tax year, the Government’s system now calculates that amount across the year and therefore overestimates your annual income.
Although this could have happened before the new Government system means that the problem arises instantly.
Should this happen to you will need to log onto your personal tax account on the “Government Gateway” and suggest a change to estimated income.