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HMRC internal manual

PAYE Manual

HM Revenue & Customs
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PAYE operation: simplified deduction schemes: code change

Note: DOME schemes became standard P schemes from 6 April 2014. This guidance refers to all years up to and including 2013-14.

When you need to change a code

  • For domestic schemes, the Manual Correspondence to Employer indicator will be set on the individual’s employment record and you must issue a P12 for DOME scheme with a revised tax code and free pay. On the Tax Code details screen for P6/P9 issue, select ‘Manual issue’ from the drop down in the Issue Forms section and ‘Submit’. Record a Contact History note that a P12 has been issued manually
  • Complete in full a fresh deduction card P12
  • Enter the free pay for each week or month from the Free Pay Tables (Table A) in column 6 and send it to the employer
  • Remind the employer to

    • Return the old deduction card P12 to you


    • Remit the tax shown on it to Banking Operations

Where a K code becomes appropriate

  • Reduce the code to 0T and issue a fresh deduction card P12
  • Refer the case to your manager to deal with in accordance with ‘K code appropriate’ at PAYE73030 

Receipt of form P12R

When the employer gets a fresh deduction card P12 with a revised code he or she sends in the old card. The Employer section will update the NPS record to show

  • Total pay and tax
  • The first and last pay days

The PAYE section must consider what action is needed because

  • A non-cumulative system was operated by the employer
  • The Tax Office must therefore make any refunds due

If the code was increased a repayment may be due

  • To calculate the repayment due use the

    • Pay and tax figures for the year to date
    • New code
    • Cumulative Tax Tables to the last pay day on the old code
  • Make any repayment using a Manual Payable Order

    • Prepare a manual R23 and SEES R37
    • Pass the case through, with the P12R, to the nominated officer for a manual payable order to be prepared
  • Once the R23 is passed back to you, you must access the ‘Record Manual Repayment’ screen
  • Record

    • The amount of the repayment
    • The PO Serial number
    • The date of issue of the repayment
    • The person to whom the PO has been issued if this is a nominee

If the code was reduced you need take no action.

Code revised on change of employment

Following a change of employment to an employer who does not operate a simplified deduction scheme, you must review the employee’s code. Wherever possible the cumulative basis should be restored immediately and details of pay and tax to date sent to the new employer.