Monday, 1 August 2016

Change of employees' tax regime from 2018

People who are employed pay income tax in instalments (monthly if they choose) on the basis of the previous year's income. From 2018 it will change to a "current year" basis, deducted at source by the employer. A system of codes similar to UK PAYE (pay as you earn) will be brought into use, based on 2017 income, meaning for the first time that at the end of the tax year no adjustment will be needed (all things being equal!!). Also civil partners and married couples whose tax is calculated jointly may opt for separate codes to reflect the relative income of each partner - otherwise one partner could end up with a very high tax level and the other a lower rate.
Those of us familiar with PAYE know that it is not without problems, especially in these times of frequent job changes and that employers resent the extra work involved. It may be some time until this settles down.
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