Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

PAYE Manual

HM Revenue & Customs
, see all updates

Coding: coding: general principles: budget coding

This subject is presented as follows



A PAYE Business Guidance Note (BGN) is issued each year to provide detailed instructions about Budget coding. The BGN will include the date of each review made by the system. Every record except where the deceased indicator is set is reviewed by the system to determine the new code with the Budget changes.

Initial Review

The Initial Review is needed when the nature of the Budget proposals are such that certain cases require manual intervention before the automatic recoding process. For example the type of case which might require clerical action in a particular year may be

  • An amount of Married Couple’s allowance aged 65 - 74 in coding but the dates of birth held on the system show that neither the individual nor his wife is aged 65 to 74 at 5 April in the year
  • Allowances are increased but tax rates are also increased and the Manual code indicator is set. The increased codes must coincide with the introduction of the new Tax Tables to avoid excessive deductions of tax
  • Manual Code indicator set where a case has a T suffix with allowances allocated elsewhere must therefore be listed so that recoding can occur at the same time as automatic recoding

Main Review

The main Budget review is needed whenever the Budget proposals affect individual’s codes or any other information held on the system.

Final Review

The final review is needed to review the records and issue a notification to employers or Benefit Offices for all those cases where the original form P6 and / or P6U notification has been suspended during a P7X uplift period (normally about three weeks).

Work items

Work items will be generated and the work item description will indicate why the annual coding has not taken place. Work item ‘244 Automatic Coding update - manual code indicator set’ will be generated for Manual Code cases where the system is automatically updating codes at Budget coding. For work item 244 follow the guidance at PAYE13025.

Work item 210 will also be generated.

210 - Budget Coding - P6 not issued Generated when the system cannot automatically issue a P6 in daily or at budget or at annual coding when a P9 cannot be issued to the employer because there is no correspondence address, the correspondence address is RLS or the deceased indicator is set on the employer record. The guidance to follow is SPD WI210.