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HMRC internal manual

PAYE Manual

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

This subject tells you about the Tax Calculation screen, the way in which you navigate to it and how you can use it to navigate to other screens that give further details of figures used in tax calculation.

For cases where a year prior to CY-1 is open (for example CY-2) and CY-1 holds all information required to reconcile, the PAYE Service will

  • Automatically undertake a tax calculation for CY-1
  • Retain details of the tax calculation on the customer’s record
  • Display the result of the calculation for CY-1 in the Tax Calculation and Reconciliation Summary screens

The calculation is a ‘working sheet’ only at this stage and it will not be issued to the customer. The year is however ready to be included when calculating the customers liability up to date and the system will do this automatically by including CY-1 in a multiple year reconciliation (PAYE96201) at the time CY-2 is ready to be reconciled.

Note: The Tax Calculation screen is used to display tax calculation details for both single year reconciliations and where a calculation is part of a multiple year reconciliation (PAYE96201) and the details displayed on the screen differ slightly to account for this. Where applicable, the text within the sub headings below gives details as to which fields apply to one of the screens only.

The rest of this subject is presented as follows

In the case of a single year reconciliation where you navigate to the Tax Calculation screen from the Reconciliation Summary screen by selecting the View Record icon to the right of the relevant entry on the reconciliation list, if

  • Only one calculation is present for the tax year, you will be taken straight to the Tax Calculation screen
  • More than one tax calculation exists for the selected tax year, you will be taken to the Tax Calculation Choice screen where you can choose the tax calculation you want to view by selecting the View Record icon to the right of the relevant calculation. This will then take you to the Tax Calculation screen

In the case of a multiple year reconciliation, where you wish to review a Tax Calculation prior to approving or cancelling the reconciliations, you navigate to the Tax Calculation screen from the Multiple Years Reconciliation Summary screen by selecting the View Record icon to the right of the relevant entry on the reconciliation list.

Status field

The Status field displays the final status applied to the year taking into account, where required, any overpayment / underpayment brought forward into the year. In a case where the year being viewed was reconciled as

  • A single year reconciliation, the field will display

    • ‘Reconciled - Balanced’ - when the year end result of the calculation is an amount of tax paid approximately equal (within the set tolerance, see PAYE93075) to the amount of tax due
    • ‘Reconciled - Underpaid’ - when the year end result of the calculation is an amount of tax paid less than the tax due to be paid and the figure is outside the tolerance
    • ‘Reconciled Overpaid’ - when the year end result of the calculation is an amount of tax paid more than the tax due to be paid and the figure is outside the tolerance
  • Part of a multiple year reconciliation, the field will display the status applied to the year taking into the account the results of the other years reconciled within the reconciliation. For example, in a year where the customer is overpaid or underpaid at the year end by an amount outside tolerances, the year concerned may be cleared with a status of ‘Reconciled - Balanced’ where the final result of the all years within the multiple year reconciliation is balanced

Tax Calculation field

The Tax Calculation field displays whether the calculation is ‘Issued’ ‘Pending’, ‘Blank’ or ‘Cancelled’. To determine this, the system will look at the status of the tax calculation (P800).

It will take up to 2 days for the P800 to be issued for underpayments, see PAYE93045.

P800 for overpayments will be issued at the same time as the repayment, see PAYE93040.

Amount field

The Amount field displays the amount by which an individual has under or overpaid in the year. The figure concerned is the result for the year the tax calculation refers to in isolation and where the tax calculation being reviewed was part of a multiple year reconciliation, it is not necessarily linked to ‘Status’ shown on the calculation. For example, in a case where a multiple year reconciliation was undertaken covering CY-3 to CY-1 and CY-3 was underpaid by £500 and CY-2 was overpaid in isolation by £200, the Amount field on the CY-2 Tax Calculation screen will show £200 (overpaid), but due to amount of underpayment carried forward into the year, the status will be ‘Reconciled - Underpaid’.

In cases where the tax calculation was undertaken as a single year reconciliation and the ‘Status’ of the tax calculation is ‘Reconciled - Balanced’ the Amount field will be blank.

Multiple Year Reconciliation checkbox

The Multiple Year Reconciliation checkbox indicates whether the tax calculation being viewed was a single year reconciliation or a tax calculation that forms part of a multiple year reconciliation. The checkbox will be unchecked where the calculation was a single year reconciliation and checked where the calculation forms part of a multiple year reconciliation.

The Issue Copy of Tax Calculation action link allows you to issue a copy of a tax calculation that has already been issued, that is, a calculation with a status of ‘Issued’.

Note: The Issue Balanced Tax Calculation action link only displays on the Tax Calculation screen where a single year reconciliation is being undertaken. Where you need to issue a balanced calculation within a multiple year reconciliation you should follow PAYE96225.

In the case of a single year reconciliation, the Issue Balanced Tax Calculation action link allows you to issue a tax calculation that would not otherwise be issued as the calculation balanced within tolerances. Where you select the Issue Balanced Tax Calculation action link for a case where an underpayment / overpayment within tolerances arises

  • You will be taken to the appropriate reason for underpayment / overpayment screens that allow you to view the details to be recorded on the Tax Calculation (P800)
  • The Reconciliation status for the year will change from ‘Reconciled - Balanced’ to ‘Reconciled - Underpaid’ or ‘Reconciled - Overpaid’ as appropriate
  • Although within tolerances, the underpayment will be pursued / overpayment repaid

You cannot issue a Tax Calculation (P800) using the PAYE Service for cases that balance exactly. Where a calculation is required for such a case, you should issue a manual copy of the calculation in accordance with PAYE93075, along with an appropriate letter of explanation. SEES stock letter OCA42 can be used in these cases.

Note: The Cancel Tax Calculation action link only displays on the Tax Calculation screen where the calculation is a single year reconciliation. Where you need to cancel a calculation within a multiple year reconciliation, you will need to cancel all calculations that form part of the multiple year reconciliation, see PAYE96235.

In the case of a single year reconciliation, where a tax calculation is found to be incorrect, dependant upon the position of the case at the time, the Cancel Tax Calculation action link will allow you to cancel the calculation.

More information on cancelling a tax calculation undertaken as a single year reconciliation can be found at PAYE93065.

Total Non-Savings Income field

The Total Non-Savings Income field displays the total non-savings income that has been taken into account in the tax calculation. Details are taken from the Total Non-Savings Income screen. You can access the screen concerned by

  • Selecting the View Record icon next to the ‘Total Non Savings income’ field on the Tax Calculation screen

If a benefit is employment related and there are a number of employments for the tax year then these will be displayed separately by employer reference (EMPREF).

From the Total Non-Savings Income screen you can drill down to the IABD Employment Benefits screen (PAYE130040) and the IABD Expenses screen (PAYE130050).

Total Savings Income field

The Total Savings Income field displays the total savings income that has been taken into account in the tax calculation. Details are taken from the Total Savings Income screen. You can access the screen concerned by

  • Selecting the View Record icon next to the ‘Total Savings Income’ field on the Tax Calculation screen

From the Total Savings Income screen you can drill down to the IABD Investment Income screen (PAYE130060).

Total Income field

The Total Income field displays details of the total income charged in the tax calculation. The amount concerned is the total of the amounts in the Total Non- Savings Income, Total Savings Income and Total Dividends fields.

Total Deductions field

The Total Deductions field displays details of the total deductions that have been taken into account in the tax calculation. Details are taken from the Total Deductions screen. You can access the screen concerned by

  • Selecting the View Record icon next to the ‘Total Deductions’ field on the Tax Calculation screen

From this screen you can drill down to IABD screen that shows the relevant deduction. For example by selecting the View Record icon to the right of the Loan Interest row you will be taken to the IABD Allowances screen (PAYE130025)

Total Allowances field

The Total Allowances field displays details of the total allowances that have been used in the tax calculation. Details are taken from the Total Allowances screen. You can access the screen concerned by

  • Selecting the View Record icon next to the ‘Total Allowances’ field on the Tax Calculation screen

Tax Due fields

The ‘Tax Due’ fields (that is, the Total Non Savings Tax, Total Savings Tax, Tax Chargeable and Total Income Tax Due fields) in the Tax Calculation screen show you the tax due / chargeable in the calculation. Details are taken from the Total Tax Chargeable screen which shows the total income for the year along with the tax rates at which the income has been charged. You can access the screen concerned by

  • Selecting any of the View Record icons next to Total Non Savings Tax, Total Savings Tax, Tax Chargeable or Total Income Tax Due fields

For reconciliations for the tax years 2016-17 onwards, at the bottom of the screen is a total tax liability for each rate. If the customer is a Scottish taxpayer the amounts will be split between the Tax Liability rUK (the amount of tax due to the Westminster Government) and the Tax Liability STp (the amount of tax due to the Scottish Government). The split is proportional to the tax due for each country.

For example, for 2016-17, the Scottish tax element is 10% (making the BR 20%, HR 40% and AR 45%) the split will be 10:10 for the basic rate, 30:10 for the higher rate and 35:10 for the additional rate.

If the customer is not a Scottish taxpayer the full amount of tax will be in the Tax Liability rUK fields.

Cumulative Tax Liability field

The Cumulative Tax Liability field displays the amount of under / overpayment arising in the year.

[Submit] button

The [Submit] button takes you to the overpayment / underpayment ‘reasons’ screens (PAYE93040 and PAYE93045 refer) to allow you to view the overpayment / underpayment reasons automatically selected by the system.

The button will not be present on the Tax Calculation screen

  • For cessation repayment claim cases at the time you are dealing with the claim and you will not be required to review / enter overpayment reasons on to the customer’s record in these cases
  • For cases other than cessation repayment claims, where the calculation concerned is noted as ‘Pending’ or ‘Issued’ in the Tax Calculation field and for these cases you will need to access the overpayment / underpayment reasons screens using the [P800 Reasons] button

[P800 Reasons] button

The [P800 Reasons] button takes you to the overpayment / underpayment ‘reasons’ screens (PAYE93040 and.PAYE93045 refer) to allow you to view the overpayment / underpayment reasons automatically selected by the system.

The button will

  • Not be present on the Tax Calculation screen where a cessation repayment claim has already been processed and no reason(s) for the overpayment will have been recorded in the overpayment reason screens at the time the claim was processed
  • For cases other than cessation repayment claim cases that have already been processed, only be present on the Tax Calculation screen where the calculation concerned is noted as ‘Pending’ or ‘Issued’ in the Tax Calculation field and for all other cases you will need to access the overpayment / underpayment reasons screens using the [Submit] button

[Cancel] button

The [Cancel] button allows you to cancel out of viewing a tax calculation without saving any changes made to the calculation. The calculation will retain its original values and status and other than for cases where the status was ‘Issued’ or ‘Cancelled’, it will allow you to amend the calculation and issue it at a later date.

In the case of a single year reconciliation only, where you use the [Cancel] button to cancel out of a calculation and the calculation concerned is the latest undertaken in the year, details of the calculation will display in Reconciliation Summary screen.

For a single year reconciliation where the year concerned has not already been reconciled, you should only cancel out of a tax calculation using the [Cancel] button where

  • You are going to amend a value within the calculation immediately and re-trigger the reconciliation
    Or
  • You are going to instigate an enquiry regarding the calculation and you will BF the case to update it at a later date with a view to re-triggering the reconciliation
    Otherwise
  • You should cancel the tax calculation completely using the Cancel Tax Calculation action link PAYE93065

You should follow this guidance in all single year reconciliation cases where the year concerned has not already been reconciled, as failure to ‘cancel’ the calculation correctly may lead to the case being overlooked when the PAYE Service is scanned for ‘open’ cases (PAYE96001).

In the case of the calculation being part of a multiple year reconciliation, you will need to cancel all calculations within the multiple year reconciliation, see PAYE96235.