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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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PAYE operation: pensioners: small occupational pensions

Where there is one or more small occupational pensions set up as secondary sources, calculate any surplus allowances that are available from the primary source. Use the edit employments allocation function from the Tax Code Header screen in the coding area to allocate any surplus allowances. PAYE13070 has more information.

If no surplus allowances are due, the occupational pension secondary source should be coded 0T, BR or D prefix as appropriate unless the individual requests that their allowances are reallocated between their different income sources. See PAYE11055 for more information about ‘Special codes for secondary sources’. Consider swapping primary and secondary source employments if this will make long term management of the case easier.

Note. Where the Scottish Rate of Income Tax is applicable it will include an S Prefix to the tax code, for example, S0T, SBR or SD. Further information is given at PAYE100035

Coded occupational pensions

In day to day work where you identify cases that have a deduction in the primary sources tax code for an occupational pension, forces pension, public service pension or national board pension you should

  • Review the P14 SUMMARY / END OF YEAR RECORD SUMMARY screen within ‘employments’ to ascertain the PAYE reference of the coded pension
  • Review contact history and COP history to establish the pension source of the coded pension

Coded pension source identified

Where you can identify the pension source the coded deduction relates to you should remove the deduction from the primary sources tax code and allocate the appropriate allowances as necessary, see PAYE11055 and PAYE13115 for further guidance.

Unable to identify the coded pension source

Where you cannot identify the pension source the coded deduction relates to you should leave the pension coded for both CY and CY+1 at the primary source.