HMRC has now started using RTI data from employers to recalculate employee tax codes in real-time. This will be used when a tax code review is triggered, such as when a new BIK is notified.

Where a potential underpayment is identified HMRC will make an in-year adjustment to the code for the current tax year (aka dynamic coding) rather than waiting to code out the difference in the following tax year. It will also allow for in-year repayments to be made to employees and should reduce the number of annual P800 notifications.

The existing limits with respect to the amounts which can be coded still apply.