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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: coding out: collecting debts from taxpayer’s wages

From April 2012 we will start to collect Self Assessment debts and Tax Credit overpayments from the taxpayer’s wages, up to the value of £2999.99 by amending the tax code of individuals in PAYE employment or receiving a UK-based pension.

Changes to regulations meant that from April  2015 HMRC introduced a graduated income scale which will identify how much debt can be collected from individuals’ tax codes, up to a maximum of £17,000.


Annual PAYE earnings Coding out limits
Up to £29,999.99 £3,000
£30,000.00 - £39,999.99 £5,000
£40,000.00 - £49,999.99 £7,000
£50,000.00 - £59,999.99 £9,000
£60,000.00 - £69,999.99 £11,000
£70,000.00 - £79,999.99 £13,000
£80,000.00 - £89,999.99 £15,000
£90,000.00 and above £17,000

The first class 2 NIC coded out debts will be included in wage packet deductions from April 2014.

Please note that if you now make an adjustment to the amount coded out on NPS this may lead to a credit adjustment to the taxpayer’s wages - see DMBM618100.