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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employment maintenance: create employment: review code

When you action a work item or review an in-year record you should review the code currently in operation to determine whether an update to the code is required based on the information held.

Consider using the User Calculation Assistant Tool (UCA) to assist with tax table checks, previous pay and tax calculations, and help to determine the basis of operation for revised tax codes.

A revised cumulative code can be issued when

  • You are satisfied you have the full employment history
  • There is not a gap between employments or a gap from the 6 April CY to the start date of the first employment in the tax year of more than 10 weeks
  • Tax table check does not calculate an underpayment (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , see PAYE71035

Note: When performing a tax table check without using the UCA, use the information held on the latest FPS received together with any pay and tax details from previous employment(s) in this tax year to calculate the liability.

If the above are satisfied the cumulative code should be issued ensuring you include all previous pay and tax details held.

Incomplete employment history

If when reviewing CY, the latest live primary source commenced in CY-1 and all other previous primary employment(s) commenced in CY-1 (or earlier), the previous primary employment(s) should be treated as having ceased prior to the commencement of the latest live primary employment.

If there is a gap in employment of more than 10 weeks, the gap in employment should not be reviewed unless the individual has requested that their current year code should be reviewed. A P91 should only be issued if the individual is unable to provide missing information by another means, see PAYE64025.

If there are outstanding P45 Part 1 or FPS leaving details for previous employments or periods of JSA, the missing information should not be requested from the previous employer unless the individual has requested that their tax code is reviewed and they are unable to provide P45 Part 2 and 3 from their previous employer(s), see PAYE64025.

In these circumstances you should consider whether a week 1 / month 1 code should be issued to the latest employer if a cumulative code cannot be issued.

Changing employment type

If you need to change employment status from secondary to primary or primary to secondary

  • Amend the Employment type field

Note: You cannot amend secondary to primary until the primary employment, if held, has had its employment status changed to secondary.

If you amend employment status from secondary to primary you must make sure the previous primary employments P45 Part 3 is held or is now out of date. This is to stop the possibility of the individual handing the previous primary P45 into a new employment creating duplicate allowances.

Before issuing a revised code

Review whether HMRC has previously issued a tax code for the employment or whether this is the first tax code to be issued for the employment.

  • If HMRC has not previously issued a tax code for the employment, the employer will be operating the start tax code. You can view the start tax code for the employment on the EMPLOYMENT DETAILS screen

Note: If the start tax code is 0T and the Employment Allocations screen shows 0T as the override tax code you should not manually change this tax code unless you have full income details for all employment sources to enable the correct tax code to be calculated for each source of income. If full income details are available and you are issuing a revised code you will need to remove the OT override indicator.

Note: In all cases you should also review CY+1 and ensure that week 1/month 1 basis of operation is not carried forward at Annual Coding.

  • If a tax code has previously been issued for the employment, the employer will be operating the last tax code issued
  • If you have inserted an employment and you do not know what tax code is currently being operated by the employer, you should review the P14 SUMMARY / END OF YEAR RECORD SUMMARY screen to see if P14 details have previously been received for that employment. If a P14 has been received the tax code shown will give an indication of whether the revised tax code needs to be issued on a week 1 / month 1 basis
  • If you have inserted an employment and a P14 has not been received for the employment and you do not know what tax code is currently being operated by the employer, you must always issue the tax code on a week 1 / month 1 basis

Issue a revised tax code

  • Complete the IABD LANDING screen, see PAYE130010 and select [Save]

Note: Estimated earnings must be completed on the IABD LANDING screen for a tax code to be issued.

  • When IABD is completed [Submit] the IABD LANDING screen
  • Review the TAX CODE DETAILS screen, see PAYE11130 and [Submit]
  • Review the EDIT EMPLOYMENT ALLOCATIONS, see PAYE13115 and consider the basis of operation and [Submit] to issue the revised tax code

Note: The tax code must be issued on a week 1 / month 1 basis when the revised tax code to be operated is lower than the current tax code in operation.