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HMRC internal manual

PAYE Manual

Coding: coding deductions and expenses: jobseeker’s allowance

Certain benefits claimed by the unemployed are classed as taxable benefits. We treat a record for a benefit claimant as a live record.

Generally you should prepare or amend the tax code of a benefit claimant in the usual way. However, you need to remember that the PAYE Service sends a form P6U(T) to tell the Benefit Office of a revised tax code. If you have to ‘manually’ issue the tax code you should use a form P6U.

Note: You should manually issue a form P6U where the PAYE reference of the previous employment has been used for the Jobseeker’s Allowance employment record and the PAYE scheme for the employment has ceased. This is because NPS will automatically stop the issue of form P6U where the PAYE scheme for an employment has ceased. You can confirm the Employer Scheme History using the ‘Employer Business Service’ (EBS).

From 6 April 2016 where an individual is a Scottish resident the tax code will have an S prefix. It is essential where you manually issue a form P6U and the individual is a Scottish Taxpayer the tax code includes the S prefix.

Further information is given at PAYE100035

Sometimes it may be necessary to estimate the amount of taxable benefit a claimant will receive. This may be because

  • You need to work out the likely tax bill to help you with coding or transfer of allowances
  • You have no report of the rate of benefit received

When this happens, take the taxable benefit at the full weekly rate for a single person or couple (married or not). However, you should remember that an unemployed husband will not receive benefit for his wife if she is working. You will find the rates on the chart P242.

Form P6U(T) or P6U not operated

A Benefit Office may not be able to use the details given on the P6U(T) or P6U. The reason for this will be given on

  • A P6U rejection printout produced in the issuing office
  • The back of the manual form

 Action guide tax40067 tells you the action to take in each case.