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HMRC internal manual

PAYE Manual

Employer records: maintain schemes: maintain scheme type

You may be advised that an employer or contractor has changed their circumstances resulting in a change in the type of employee they either now employ or no longer employ.

When this happens, you must review the employer record and make any necessary changes to it. Changes may also be needed to the type of stationery that the employer or contractor completes, but this will be dependent on when the changes took place.

You must also ensure that you fully advise the employer or contractor of the effect of their new scheme type. This may include

  • Revised employer reference
  • Revised annual return
  • Revised tax tables
  • Ability / inability to file online
  • Change of scheme type to or from one that is excluded from the need to complete mandatory online filing

Note: An excluded employer is not required to file their annual end of year returns online. The scheme types which are excluded from segmentation and the need to use online filing to submit their returns are DCNI, DPGEN, DPNI, ELECT, EXAM, NORPRO, PSS, TAS and XP.

You may be prevented from changing the scheme type in the following circumstances

  • The employer record contains details of CIS deductions suffered from a captured return but the scheme type chosen is not one which supports CIS deductions suffered (the scheme types that support CIS deductions suffered are P and PSC)
  • The employer record has tax credit basis employments attached to it but the scheme type chosen is not one which supports the payment of tax credits (the scheme types that support tax credit payments are P, PSC, NI and SICK)

There can be several reasons for HMRCs interest attached to a single employment. The basis for the employment will consist of one or more of the following

* PAYE (Pay As You Earn) indicating that the employment is paid above the earnings threshold for tax and NIC and is of interest to PAYE processes
* TC (Tax Credits) indicating that the employment is authorised to receive tax credits by the employer and is of interest to NTC
* SL (Student Loans) indicating that the employment is a potential source of Student Loan deductions by the employer and is of interest to SLBS
* JSAPS (Jobseeker’s Allowance Payments)
* IB (Incapacity Benefit)
* OCCPN (Occupational Pension)

There will generally be 11 changes of scheme type that you are likely to come across. PAYE27026 lists the Action Guides available for this subject.

Note: The Employer Business Service (EBS) automatically generates employer referencing for any new employer records that you create.

Any other changes of scheme type that have not been covered in specific Action Guides would normally be due to an employer record being set up as a particular scheme type in error. If you do come across this situation, you will need to look at the Action Guides relating to the scheme types you are presented with for guidance along with the System Help, which is available to you at function, screen, field and error message levels.