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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Coding: coding deductions and expenses: P11D benefit and expenses work items

ECS is used to capture details of all taxable benefits and expenses payments provided to directors and employees. When the P11D is captured, ECS in all cases (both SA and non SA)

  • Checks the employee’s cash equivalent calculations
  • Identifies any discrepancies between the employer’s calculations and those made by ECS
  • Checks and provides a coding forecast for the current year (CY)
  • Provides a coding forecast for the following year

The PAYE Service will automatically update the individual’s tax code and benefit and expenses details on Income, allowances, benefits and deductions (PAYE130000) where validation is met.

Important note about cumulating tax codes: When there is a change of employment the system will not automatically restore non-cumulative codes (week 1 / month 1). Where there are large gaps of employment you must check for any previous pay and tax details and issue cumulative codes to include the previous pay and tax on the P6 issued to the employer. There is more information about gaps in employment at PAYE64025.

If the non-cumulative code (week 1 / month 1) is continuing ensure that the system displays the correct basis of operation.

P11D benefit and expenses work items will be generated for the reasons given below.

The remainder of this subject is presented as follows

Coding cannot proceed

Work items will be generated and the work item description will indicate why auto coding has not taken place. The work items are

077 - BEN / EXP - no trace individual Benefit or expenses form received but no trace of the individual’s account on the system. Benefit details will be on the work item. See Action guide at PAYE120035 and tax40090 (WMI077).
   
142 - BEN / EXP - Negative benefit amount Generated when ECS provides information about benefits which includes a negative amount see Action guide tax40128.
153 - BEN / EXP - Current EMPT commenced on / after 6 April Generated where the current primary employment started on or after 6 April for CY and one or more of the benefits now being considered are already present in the CY code. The action guide is at PAYE12016.
154 - BEN / EXP - Earlier amendments to CY code Generated where the current primary employment is a continuing employment from the previous year, and the benefit(s) now being reported have already been changed in the tax code in CY. The action guide is at PAYE12017.

PAYE110001 explains more about work items.

Coding has taken place but a P6 could not be issued

A work item will be produced because the P6 could not be issued where

  • The manual correspondence to employer indicator is set
  • The employer’s communication address is present and the employer RLS or ABROAD indicator is set
  • No communication address is present and the employer RLS or ABROAD indicator is set
  • The Deceased indicator is set on the employer record
  • The employer scheme type for the current year is DOME
  • The employer has ceased or the employer record is noted Transferred-Out / Merged-Out / Succession-Out or Cancelled

There may be multiple reasons why a P6 could not be issued but only one work item will be generated.

The work item is

146 - BEN / EXP -manual correspondence to employer required Generated when an individual’s record shows that manual correspondence to the employer is required. See Action guide tax40129 WMI146 for further guidance.
   

Coding has taken place but a composite P2 could not be issued

A work item will be generated if a P2 could not be issued because the manual correspondence to individual is set.

The work item is

082 - Manual P2 / P2X necessary P2 / P2X cannot be issued as the manual correspondence indicator is set on the individual’s record. See Action guide tax40145 WMI082. Note: From 28 October 2015 the composite P2 replaced the P2X, however, the work item title remains unchanged.