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PAYE Manual

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HM Revenue & Customs
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Reconcile individual: end of year reconciliation: tax calculation issues

When preparing a tax calculation for issue or, reviewing a calculation that has already been issued, you should be aware of the following issues

Underpayments and overpayments
Chargeable Event Gain: effect on the Total Income figure
Maintenance Payments: effect on the Tax Due figure
Non refundable tax credits: effect on the Tax Due figure
Concessional Relief
National Insurance Benefits - State Pension
Trustees in Bankruptcy
Individual Bankruptcy cases
Debt Relief Orders
Voluntary Arrangements
Investment Income - general
Investment Income - Taxed Investment Income carried forward
Other Income (Earned)
P11D Benefits
Van Fuel Benefit
Pension Payments - Retirement Annuity payments
Multiple periods of employment with the same employer in the same year
Deceased cases
Charitable Donations
P11D: COP migration recording benefits in kind against wrong employment
Trusts, Settlements and Estates income at savings rate
Notional Tax Credit Relief
NT coded P14 or EOY Record information
P14 or EOY Record: incorrect pay figure
Under / overpayment reasons
Married Couple’s Allowance
No Allowances indicator: Effect on batch reconciliation
Missing Employments

Underpayments and overpayments

Where a Tax Calculation includes an underpayment or overpayment from an earlier year and / or it includes an underpayment or overpayment to be carried forward to a later year and you need more information about the amount concerned, you will need to review the customers Accounting (PAYE98000) records. The customers’ tax history is now detailed on the last page of the final P800 from a multi-year reconciliation. The history will include over and underpayments, balanced results and if the customer was in SA. Be aware that the final P800 is not always the most recent year, as a P800 would not be issued if that year was balanced.

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Chargeable Event Gain: effect on the Total Income figure

Although Chargeable Event Gains are taken into account in the Total Income field within the Tax Calculation screen (and are charged within the calculation), they do not appear in the Total Non Savings Income field or, within the Total Non Savings Income screen itself. For example, where a chargeable gain of £10,000 for the year has been included in the calculation and other income in the year totalled £20,000 the relevant fields of the Tax Calculation screen will show

Total Non-Savings income 10,000.00
   
Total Savings income 10,000.00
Total income 30,000.00

 

(The two income fields actually add up to £20,000. However, as the tax calculation takes the £10,000 Chargeable Event Gain into account, the Total Income is shown as £30,000 (£20,000 plus £10,000).

Details of the Chargeable Event Gain (along with any tax credit given in respect of it), can be viewed in the Investment screen within IABD and you may need to do this where you are trying to verify whether or not a tax calculation is correct.

There will be circumstances where a Chargeable Event has occurred and due to the level of non savings income the savings starting rate is available to utilise against the event. The Tax Calculation does not include the event within the total savings income and therefore this may lead to incorrect rate allocation. The tax deducted from the chargeable event is notional and not available for repayment however there may be other savings tax deducted available for repayment. In these circumstances only where a case is identified, to ensure that the event is charged at the savings starting rate but the tax deducted is not refunded, the event should be recorded in the investment screen within IABD as Foreign Dividends (along with any tax credit) for the year of reconciliation only and an appropriate Contact History note added.

Chargeable Event Top Slicing relief for higher rate cases is calculated and included within the Tax Calculation from information entered within IABD, PAYE130060 refers. However where multiple Chargeable Events occur in the same tax year and the number of years for the chargeable event differ, the correct amount of relief will not be calculated. In these circumstances where the

Customer is liable to higher rate tax

A self assessment return should be issued for the year in which the Chargeable Events arose. The self assessment record should be made dormant immediately by setting the ‘Last year return required for’ signal in Self Assessment.

A self assessment return should be issued for the year in which the Chargeable Event arose. If reduced age-related allowance only applies for the year in which multiple gains occurred, then the self assessment record should be made dormant by setting the ‘Last year return required for’ signal in Self Assessment.

Customer is liable to basic rate tax only

Record the Chargeable Event through IABD, PAYE130060 refers, add together the total gains, enter the figure in IABD along with the total number of years as 1. No Top Slicing Relief will be due in these cases; make a Contact History note to record the action taken.

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Maintenance Payments: effect on the Tax Due figure

Although relief due for Maintenance Payments is taken into account in the tax calculation, you will not be able to see details of the payments themselves within the Tax Calculation screen or the reconciliation screens (for example the Total Tax Chargeable screen) you can access from it. For example, where an individual is due relief (at 10 per cent) on payments of £2,440 the Tax Calculation screen will show

Total Income Tax Due 2,000.00
   
Total Tax Paid 1,000.00
Underpaid 756.00

(The difference between the tax due and the tax paid is £1,000. However, as the tax calculation takes the relief due in respect of the Maintenance Payments into account, the underpayment is £756 (£1,000 minus £244)).

Details of the Maintenance Payments can be viewed in the Allowances screen within IABD and you may need to do this where you are trying to verify whether or not a tax calculation is correct.

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Non refundable tax credits: effect on the Tax Due figure

Although non-refundable tax credits (Foreign Tax Credit Relief, Widows and Orphans Relief and Tax Credits on Dividends) are taken into account in the tax calculation, you will not be able to see details of the payments themselves within the Tax Calculation screen. For example, where an individual has £200 non-refundable tax credit the Tax Calculation screen will show

Total Income Tax Due 2,000.00
   
Total Tax Paid 1,000.00
Underpaid 800.00

(The difference between the tax due and the tax paid is £1,000. However, as the tax calculation takes the non-refundable tax credits into account, the underpayment is £800 (£1,000 minus £200)).

Details of the non-refundable tax credits can be viewed in the Total Tax Chargeable screen and you may need to do this where you are trying to verify whether or not a tax calculation is correct.

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Concessional Relief

Details of items to look for where Concessional Relief is due / given in a tax calculation can be found at PAYE93090.

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National Insurance Benefits - State Pension

IABD Start Date

Action guide tax40160 advises you to enter the start date and State Pension with a frequency of weekly / monthly for CY.

Once the information has been submitted, IABD summary will show State Pension as frequency type annual with the estimated NIB box ticked. This will allow the PAYE Service to calculate the actual State Pension due for the year at end of year reconciliation.

Lump Sum deferral

Where a customer defers receipt of their State Pension (PAYE94090), whilst any lump sum payment that they subsequently receive is charged correctly within the tax calculation itself, details of the payment concerned are not displayed in the Total Income or Total Savings Income fields in the Tax Calculation screen. Details are however displayed in the Total Tax Chargeable screen in which the rate(s) at which the payment is charged to tax is shown and you may need to refer to this information whilst reviewing a tax calculation.

Note: For the purpose of charging the lump sum to tax, the figure used within the tax calculation (and any tax credit given in respect of it) is derived from the P14 / EOY details submitted for the year (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

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Trustees in Bankruptcy

Annuities paid to a trustee of a bankrupt individual are taxable at the basic rate but do not form part of the taxable income of the bankrupt individual. However, there are instances where the payer of the annuity has incorrectly submitted a P14 or Full Payment Submission (FPS) in respect of the payment, with the name and National Insurance number of the bankrupt individual on it.

The PAYE Service is unable to distinguish any such reported payment information from that which is submitted for genuine ‘employments’, and where this is so, the annuity will have incorrectly been included in the tax calculation of the bankrupt’s liability.

Where you become aware of this in day to day work or, as a result of an enquiry about a calculation that has already been issued, you will need to rectify the situation as follows

  • Prepare and issue a free hand letter to the annuity payer informing them

    • To continue to operate code BR in respect of the annuity
    • That, as the annuity has passed to a body other than the individual, on future FPS they should

    • Leave the National Insurance number blank
    • Enter the gender as ‘Male’
    • Enter the forename as ‘RP’
    • Enter the name of the recipient body as the surname
    • Indicate ‘Yes’ in the ‘payment to a non individual indicator’ field on the FPS

Where the annuity provider has made payments in the current year

  • Tell the provider they must send an FPS with leaver information with either the date of bankruptcy if within the current tax year or 6 April of CY.  They should complete the FPS with NIL (0.00) pay year to date and NIL tax year to date.

Where the annuity provider has made payments in a previous year to a trustee for which an FPS has been submitted

  • Tell the provider they must send

 

  • an ‘Earlier year update’ (EYU) with negative pay and negative tax matching the amounts that they have previously declared on an FPS for the year, (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • an EYU with blank nino stating gender as ‘male’ using initials ‘RP’ and the name of the recipient body in the surname field with the pay and tax information relevant to this trustee for the year

Where the the annuity provider has made payments in a previous year to a trustee for which a P14 has been submitted

  • Tell the provider they must send

 

  • a P14 with negative pay and negative tax matching the pay and tax that they previously declared on the P14 (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • a P14 with a blank nino stating gender as ‘male’ using initals ‘RP’, and the name of the recipient body in the surname field with the pay and tax information relevant to the trustee for the year

 

  • Update the employment record for the annuity, following instructions in action guide tax40003
  • Reconcile / re-reconcile the case
  • Update Contact History with details of the action taken

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Individual Bankruptcy cases

NPS is unable to deal with the year of bankruptcy for PAYE cases where the year is split between the pre and post bankruptcy period and there is tax liability post date of bankruptcy not attributed to operation of code NT.

Where a record has already been set up in SA to deal with the year of bankruptcy only and there is no SA criteria, follow

  • Action guides tax40039 and tax40037
    Or
  • Where SA criteria is fulfilled, the case will remain in SA

When notification of bankruptcy is received the only cases which should be set up in SA for the year of bankruptcy are where

  • There is SA Criteria
    And / or
  • There is outstanding tax liability for the post bankruptcy period to the end of the year of bankruptcy

The year of bankruptcy for these cases should be dealt with on NPS by settling the year to ‘Reconciled - SA’.

Action Guides relating to Bankruptcy are available on the PT Operations Guidance Gateway. You should refer to these for guidance regarding coding action, reconciliations and necessary action to take to update the record.

Where the case does not meet the SA criteria, you should review and reconcile pre bankruptcy years on NPS as necessary, any resulting overpayments should be dealt with in accordance with INS9307, any underpayments should be recorded as Revenue Loss type 2 and Insolvency Claims Handling Unit (ICHU) advised of the debt using the standard template.

If you receive a deed or letter of assignment which seeks to assign a repayment to a nominee, check whether it is valid using action guide tax40006.

For any repayment

  • Prior to the date of bankruptcy legally belongs to the trustee and must be made to the ICHU or the Official Receiver / Accountant in Bankruptcy or other authorised trustee, as advised in the Bankruptcy Guidance
  • Due from the date of Bankruptcy until the following 5 April, for bankruptcy customers in England, Wales and Northern Ireland, it is to be made to the trustee if the relevant authority is held, otherwise we must repay the taxpayer or assignee. For customers who commenced at a new source of employment or pension after the date of bankruptcy, use the Repayment Claim for the Year of Bankruptcy Helpcard (on the PT Operations Guidance Gateway) to determine who is entitled to the repayment. Bankruptcy customers in Scotland do not have the year of sequestration or Trust Deed split into pre and post insolvency - see Bankruptcy Guidance

In cases where the guidance advises that a repayment can be issued to the customer, where an assignment is held, the repayment may be issued to the assignee

  • Due after the 6 April following the date of bankruptcy

    • For England, Wales and Northern Ireland, can be made to the nominee unless an Income Payment Order is held in which case the repayment is made to the ICHU or the trustee if advised by the ICHU
    • For Scotland, follow the guidance on the Sequestration and Trust Deed Repayment Guidance Helpcard

If the whole claim refers to the period from the date of bankruptcy to 5 April (within the year of bankruptcy) return it to the customer (or agent) and explain why the repayment cannot be assigned.

If the whole of the repayment is for a year after the year of bankruptcy make the repayment to the nominee unless the customer is a Scotland Insolvency case in which case the claim should be returned as stated above.

For repayments claims that are for periods which include both the years up to and including the year of bankruptcy and the following years, unless an Income Payment Order is held

  • Keep a copy of the deed or letter of assignment
  • Repay the tax due for the years after bankruptcy
  • Return the original deed or letter of assignment to the customer (or agent) and explain why part of the repayment cannot be assigned

For further information see ‘Bankruptcy’ or, for Scotland, ‘Sequestration and Trust Deed Repayments’ guidance available on the PT Operations Guidance Gateway.

The Inhibit automatic reconciliation indicator should be set for the year of bankruptcy.

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Debt Relief Orders

Debt Relief Orders (DRO) are administered by the Official Receiver, action is only required on NPS where an NPS underpayment is included within the Order.

Further guidance on action to take when notified of a DRO can be found on the Customer Operations Guidance Gateway.

Note: Code NT does not apply to DRO.

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Voluntary Arrangements

Voluntary Arrangements (VA) are administered by the Voluntary Arrangement Service (VAS) and is a contract between the debtor and creditors to pay an agreed proportion of debt. Action will be required on NPS where an underpayment is included within the VA or there is a repayment due for a year covered by the VA.

Further guidance on action to take when notified of a VA can be found on the Personal Tax Operations Guidance Gateway.

Note: Code NT does not apply to VA.

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Investment Income - general

Where the correct investment income details are held for the year but they appear to have been charged incorrectly in a tax calculation, it may be that the income concerned was not entered into IABD correctly. That is, in accordance with PAYE130060 or carried forward from an earlier year and is not the actual amount received for the year of reconciliation. You should check to see if this is so before a problem about how investment income has been charged in a tax calculation is reported and where it is determined that the figures in IABD were not entered correctly, you should

  • Re-enter them in accordance with PAYE130060
  • Reconcile / re-reconcile the case
  • Update Contact History with details of the action taken

For cases where the customer has received an incorrect tax calculation / repayment due to taxed investment income from an earlier year being carried forward into the calculation, see ‘Investment Income - Taxed Investment Income carried forward’ below.

Bank and building society interest and dividend income is taxed at the Savings and Dividend rates regardless of the taxpayers residency status.

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Investment Income - Taxed Investment Income carried forward

Although taxed investment income in tax calculations will usually be correct and / or it will not adversely affect the outcome of the calculation, this will not be so where the customer is not liable to tax and an incorrect tax calculation / repayment (based on an earlier years taxed investment income) has been issued. Where you become aware of this, for example as a result of a customer enquiry, to correct the case you should follow the actions at

  • Steps 1 - 5 below where the customer returns the original payable order with their correspondence
  • Steps 3 - 5 where they do not
1. Arrange for the payable order to be cancelled in accordance with action guide tax40120
   
2. Wait for confirmation that a fresh payable order can be issued
3. Update IABD for the year with details of the correct taxed investment income and re reconcile the year
4. To ensure that taxed investment income is not incorrectly used to create a repayment when the year concerned becomes CY-1, review IABD for CY / CY+1 and
  * Ensure that the taxed investment income captured at step 3 above is not carried forward into CY and / or CY+1 code calculation
  * Use Form Type ‘Other Form’ and select the [Submit] button to trigger an automatic tax code
5. Update Contact History with a note of ‘NNL case, Taxed Investment Income carried forward in IABD reviewed / removed’

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Other Income (Earned)

Where a tax calculation contains ‘Other Income (Earned)’ as it is recorded in IABD for the year and the employer concerned subsequently submits a P14 or EOY Record information is created in respect of the same source of income, the income concerned will incorrectly be duplicated within the calculation. During the course of reviewing a tax calculation with Other Income (Earned) within it, you should check to see whether the income concerned has been duplicated as a result of duplicate information being submitted.

Where the income

  • Has not been duplicated, continue to check the calculation with a view to approving it for issue
  • Has been duplicated

    • Update IABD for the year(s) concerned to remove the income
    • Review and update the customer’s CY and / or CY+1 tax code(s) as required
    • Re-trigger the appropriate reconciliation(s) and review / approve them for issue

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P11D Benefits

P11D benefits included in IABD are only picked up and included in a tax calculation where the ‘Form Type’ associated to the figures concerned is ‘P11D’ or ‘P11D (MANUAL)’ (PAYE93010). You will need to be aware when reviewing tax calculations and where known benefits are not being picked up in calculation you will need to

  • Follow the instructions at PAYE130040 to update / correct the record
  • Re-trigger the appropriate reconciliation(s)

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Van Fuel Benefit

Van Fuel Benefit now has it’s own section and no longer rolls up into Benefits In Kind.

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Pension Payments - Retirement Annuity payments

Retirement Annuity payments allowed within a tax calculation display in the Total Deductions field in the Tax Calculation screen and, as Gross Pension Payments in the Total Deductions screen. Selecting the View Record icon next to the Gross Pension Payments field should take you to the IABD Allowances screen (to enable you to drill down for further information) but, due to a design issue it currently takes you to the IABD Pension screen. However, you can access the IABD Allowances screen directly from within IABD and you should do this where you require full details of the pension payments included in a tax calculation.

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Multiple periods of employment with the same employer in the same year

Where a customer has a number of periods of employment with the same employer in the same year and they submit forms P14 for each period under the same reference and with the same works number, the end of year reconciliation tax calculation only takes the P14 into account that has a start date on it matching with the start date held on the customers employment record. Where you become aware of this in your day to day work or, as a result of an enquiry about a tax calculation that has already been issued, you will need to update the customer’s record to include the ‘missing’ employments and re-reconcile the year to include them in the tax calculation. To do this

  • View the P14 Summary screen for the year and make a record of the missing P14 / employment details
  • Create employment records (PAYE61000) for the missing employments
  • Capture the missing P14 information as P60’s
  • Re-reconcile the year

Notes:

1. You will need to update Contact History (PAYE105001) as appropriate when following the steps above.
   
2. When inserting a works number do not use the `#’ symbol anywhere in the works number field.

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Deceased cases

For deceased cases, unless you have already adjusted amounts recorded within IABD, tax calculations for the year of death may include incorrect details. For example, in the case of National Insurance Benefits the calculation may include a full year’s benefits as opposed to an apportioned amount to the date of death.

You should take care when reviewing tax calculations for deceased cases and where you notice that incorrect details are included in calculation you should

  • Amend the figure(s) concerned
  • Reconcile / re-reconcile the year
  • Update Contact History with details of the action taken

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Charitable Donations

Charitable Donations are made up of ‘Gift Aid’ & ‘Gift Shares to Charity’.

The following gives details as to how Charitable Donations payments are dealt with within tax calculations.

Where an individual has no liability to tax, the PAYE Service will recover the basic rate tax in the calculation. See PAYE11115 and PAYE130030 for guidance in these cases.

Where an individual has liability to pay tax at higher rate, further relief is given in the tax calculation by extending the basic rate band. The PAYE Service will ‘Gross up’ the amount entered in IABD.

Guidance in PAYE80032 should be followed when a claim to Charitable Donations is received, see PAYE130025 for IABD entries to make.

Where an underpayment or overpayment is created, by selecting the [Submit] button on the Tax Calculation screen you will be taken to the Reasons (for underpayment or overpayment) screens.

You will then need to input the reason as Charitable Donations Payment of £XX.XX and select the [Submit] button so that the calculation will be prepared by the system for issue.

If this reason is not sufficient, you need to issue a letter with a full explanation to the customer.

Where an individual has no liability to tax, with Charitable Donations coded and carried forward year on year, review both COP essential notes and Contact History to establish if the original figure came from an R40, P810 or other customer contact. If you are unable to determine where the information originated remove the figure from IABD and update Contact History with your actions.

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P11D: COP migration recording benefits in kind against wrong employment

At migration, if the COP tax code included benefits in kind in the main source record which related to the sub source employment, these will have migrated but are recorded in IABD against the primary source. In your day to day work or if you need to review a 2008-2009 underpayment, you need to check that the benefits are recorded against the correct employment and amend any to zero which are incorrectly recorded against the primary source.

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Trusts, Settlements and Estates income at savings rate

There is no specific field to enter Trusts, Settlements and Estates income at the savings rate or non-refundable dividend rate.

Any trust income

  • Which is taxed at the savings rate
    And
  • Qualifies for the starting rate for savings

must be entered in the individual’s investment income as bank and building society interest.

You must

  • Enter the gross, net and tax figures
    And
  • Make a full note in Contact History

Any trust income

  • Which is taxed at the dividend rate
    And
  • Is non-refundable

must be entered in the individual’s investment income as UK dividends.

You must

  • Enter the gross, net and tax figures
    And
  • Make a full note in Contact History

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Notional Tax Credit Relief

There is currently no facility through the PAYE Service to record or give a notional tax credit.

In cases where the following apply a non-refundable tax credit can be given to reduce the tax underpaid

  • Net of tax arrangements as set out in PAYE82001 (EPAPP5)
  • Reg72(5) and 81(4) (PAYE90020 and action guide tax40107) provided a PAYE direction is held authorising a credit under regulation 185/188
  • ESCA19 - where you are not remitting the whole amount of tax underpaid (PAYE95010)

Before any action is taken on the case, ensure all appropriate information for the year is held to update IABD.

To give a notional tax credit in PAYE Service you should

  • Update IABD landing (action guide tax40002) with all appropriate information
  • In IABD select Foreign income

    • Drill down against foreign pension
    • In the Foreign pension income field enter 1
    • In the Foreign Tax credit box enter the tax figure that you are giving credit for
    • Save
  • In IABD select expenses

    • Job expenses enter 1
    • Save
  • Submit
  • Make a clear Contact History note to say how much foreign tax credit was given and what this relates to
  • Reconcile the year

Note: The foreign pension figure of ‘1’ has to be entered for the entry to appear in IABD summary, if the box is left blank no entry will be shown in IABD summary, the expense figure of ‘1’ is only given to reduce the pension figure entered.

When you view the reconciliation for the year, the foreign tax credit will not appear in the calculation on screen but will reduce the tax chargeable figure for the year.

Subsequent review of a customers liability leading to the removal of the notional tax credit for example: Foreign Tax refunded (PAYE82001) (EPAPP5) - the entries made in the foreign pension field, foreign tax credit and expenses fields shown above should be removed and the year re-reconciled.

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NT coded P14 or EOY Record information

NPS was enhanced with effect from April 2011 to either

  • Disregard NT coded forms P14 from the reconciliation process where the code concerned was operated correctlyOr
  • Until October 2012, create a work item to allow the case to be manually reviewed where the code concerned was operated incorrectly

Prior to the enhancement, NT coded forms P14 were included in the reconciliation process and for cases where this should not have been so, where the inclusion of the P14 details resulted in an incorrect underpayment calculation, you were advised to correct the position by giving a Notional Tax credit to cover the NT element of the underpayment. You will need to be aware of this and where a case that previously had an NT coded P14 included in it is re-reconciled, you will need to proceed as follows

  • For cases where the re-reconciliation now disregards the P14, amend the calculation to remove any Notional Tax credit previously given in it in respect of the NT underpayment

Note: Where the ‘NI Only Employment’ indicator has been set against an RTI Employment, for example where the employer operates a code of NT but continues to deduct National Insurance (NI) contributions, the ‘NI Only’ employment will be included within the reconciliation issued for the year and will show ‘PAYE Pay’ of £0.00 and ‘Tax Paid’ of £0.00.

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P14 or EOY Record: incorrect pay figure

During the course of reviewing a tax calculation to be issued, or when reviewing one as a result of a customer enquiry, you may become aware that either the pay details reported by an employer on form P14, or the EOY Record information created from the FPS received, is incorrect.

A known instance of this, is where the employer inadvertently places the decimal point incorrectly within the pay figure (in which case, for example, pay received of £30,000.00 may show as £3,000,000.00 on the P14 or EOY record).

To correct the case and ensure that the correct pay feeds through to the customer’s record you will need to proceed as follows to obtain either an amended P14 from a non-RTI employer, or an EYU from the RTI employer concerned

  • Contact the employer in accordance with step 9 of PAYE46036
  • Manually BF the case for 6 weeks to allow the amended P14 or EYU to be submitted and processed. On reaching the customer’s record, the year concerned will automatically be re reconciled to include the amended, correct amount of pay
  • On BF, review the tax calculation to ensure that it now contains the correct amount of pay. Where it

Does

* You do not need to take any further action

Does not

* Contact the employer again to remind them that the amended P14 or EYU has not yet been received
* BF the case for a further 6 weeks
* On BF, review the tax calculation again to ensure that it now contains the correct amount of pay

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Under / overpayment reasons

At the point at which reconciliation is triggered and the customer is under / overpaid, the PAYE Service picks up and identifies reasons for the under / overpayments based on information held on the customers account. The reasons are populated on the customer’s record and in the vast majority of cases, the reasons identified are correct.

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Married Couple’s Allowance

Although Married Couple’s allowance (MCA) is taken into account in the tax calculation, you will not be able to view details of the allowance within the tax calculation screen. The amount of Married Couple’s allowance available can be viewed by drilling down into the Tax Chargeable field.

The amount of Married Couple’s Allowance will be deducted from the amount of tax chargeable for the year for example

Tax Chargeable 581.20
   
Less MCA 4295 at 10 per cent 429.50
Less tax paid 151.00
Tax due 00.70

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No Allowances indicator: Effect on batch reconciliation

Where the No Allowance indicator is set, it is not year specific. Therefore, if the indicator has been set and batch reconciliation takes place, no personal allowances will be given within the reconciliation even if they are due for that year. Where a previous reconciliation result exists, the personal allowances will no longer be displayed in the calculation summary.

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Missing Employments

End of year tax calculations use the employments recorded on a customer’s record to determine the pay and tax to be included within the calculation and in the majority of cases, the calculations concerned will include the correct figures. However, exceptionally, there may be limited circumstances under which a P14 is held on the customers’ record showing previous pay and tax figures on it for which an employment in respect of the figures is not held. You may become aware of this during the course of reviewing a tax calculation to be issued and where this is so do not approve (that is Submit) the calculation concerned for issue and proceed as follows

  • Make a note of the Total Pay and Tax details for the year from Pay And Tax Summary
  • Use the P800 SEES calculator entering pay and tax (including the missing employment pay and tax) with all relevant allowances and deductions for the year to establish the overall tax position for the year
  • Where the result of the calculation is an underpayment or overpayment within tolerances set the year to ‘Reconciled - Balanced’
  • Where the result of the calculation is an underpayment or overpayment above tolerance and you are dealing with

    • A work item, follow the instructions in the relevant action guide in the tax gateway.
    • Customer correspondence, where the result of the calculation is an

    • Underpayment above tolerance, recreate the calculation on the PAYE Service (that is, to exclude the missing employment pay and tax) and authorise / submit the calculation for issue and update Contact History with details of the action taken
    • Overpayment above tolerance, send a letter to the customer requesting full details of their employments / periods of JSA in the year concerned. The details requested should include

    The employers name / address

    The employers PAYE reference number

    The start / end dates of the ‘employments’

    Where the employer has gone into liquidation, any relevant documents relating to pay received from the liquidator

    Update Contact History with details of the action taken and manually clear the year as ‘Reconciled - Balanced’

If a reply is subsequently received

  • Review the customer employment record for the year and update it to include the employment the previously unlinked pay and tax figures refer to
  • Manually capture the pay and tax figures against the employment as a P60
  • Reconcile the year, review the resulting calculation and approve it, or if necessary, further amend the calculation before approving it

Note: When inserting a works number, do not use the `#’ symbol anywhere in the works number field.