There are two ways at looking at the introduction of the Personal Tax Account;

  1. HMRC are wanting individuals to resolve their own tax queries rather than contact HMRC’s helpline
  2. The account is a very useful tool to check tax codes and tax paid before contacting HMRC to resolve any queries.

The reality is that a Personal Tax Account allows taxpayers to review their tax position on an ongoing basis, rather than at the end of the tax year, or when a tax coding notice is received. So I am on the side of the fence that considers Personal Tax Accounts to be of enormous benefit to the tax paying population.

So what is the account and how do your employees get one?

The Personal Tax account was set up back in 2015 by HMRC with the intention of making it easier for individuals to check and manage their tax affairs, tax credits and benefits and state pension entitlement.

Setting up an account is easy, it is an online process. 

Step 1)    

Register for a Government Gateway account

Step 2) 

Set up the personal account. They will need your National Insurance number, together with additional personal information such as P60, bank statement or driving licence.

Step 3) 

Once the registration is compete they are ‘good to go’

What can employees do with their Personal Tax Account?

HMRC are looking at increasing the services available through the account, however the following are the main uses for the account:

Employment and PAYE

The following can be viewed, checked and updated via the account:

  • Tax code
  • HMRC estimate of your annual income
  • Employment income and tax deducted to date
  • Benefits in kind received from employment and reported on form P11D
  • Previous years’ summary of pay and tax (this will help when applying for mortgages as proof of income)
  • Notify HMRC of the change in benefits in kind, for instance the change of a company car, or the withdrawal of a company car. This will result in an real time change to the tax code rather than after the year end
  • Claim a refund if there is an over-payment of PAYE

What I have found very useful in recent months for clients is that additional income has been erroneously included on a tax account resulting in an ‘underpayment’ of tax and an amended tax code. Following contact with HMRC the erroneous income was removed. Without access to the tax account, this would not have come to light until after the year end, by which time significant amounts of additional tax could have been paid

State Pension

The account is a very useful tool for checking an employee’s pension forecast. This will assist with individuals’ retirement plans. The real benefit of the account, for pensions, is that you can check the National Insurance payment history. This will establish if there are any beaks or gaps. Such breaks or gaps can then be investigated and if appropriate additional voluntary payments can be made to ensure a full state pension is received upon retirement age.

Tax Credits

The Personal Tax Account allows claimants to renew tax credits, check that tax credit award are correct and report any amendments and changes to the tax credits received. This is important because HMRC can, and do, suspend tax credit payments if there are any errors or omissions. This ensures that payments are correct and paid on time.

In addition to all the above benefits the account also allows employees to maintain and keep up to date their personal details, such change of address.

Are there any downsides to registering? I would say not. 

Registration is free and indeed is encouraged because it allows individuals to check and keep up to date their personal and financial information held by HMRC. 

To begin the set up process click here

For more details please contact Paul Chappell on 03331 123456