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HMRC internal manual

PAYE Manual

Reconcile individual: in-year reconciliation: special circumstances

Before making a repayment, you should check whether any of the following apply and follow the guidance as appropriate.

This subject is presented as follows

Jobseeker’s / Employment Support Allowance received

Although an individual cannot routinely claim an in-year repayment of tax whilst claiming Jobseeker’s or Employment Support Allowance, repayments can be made in the following circumstances

  • Pension lump sum (formerly known as trivial commutation payments) cases, see Action guide tax40104
  • Where the customer has received a redundancy payment that has been subjected to higher rate tax deductions (Action guide tax40085)

Statutory Maternity Pay received

An employer who pays Statutory Maternity Pay (SMP) after issuing form P45 or FPS leaving information has to deduct tax at the basic rate. In some cases the recipient may be entitled to repayment of some or all of this tax. As SMP can be paid for up to 26 weeks in the year in which the employment ceased and the following year, both need to be reviewed.

Old age or incapacity

Information and action guides regarding pensioners can be found at PAYE76000 onwards.

Admission to university or other educational establishment

Where a person

  • Leaves work to go to university or another educational establishment
  • Claims a cessation repayment

A repayment can be made in the usual way where the individual

  • Receives full-time instruction at a university, college or other educational establishment
  • Is unlikely to take up further employment before 6 April next

Individual is in prison

Repayment can be made where the individual is in prison or Young Offenders Institution. For action required on the payable order see PAYE94021, steps 20 - 23.

Individual has died

From October 2014, when a verified Date of Death is received, NPS will check to see if a Capacitor is held. If not a P1000 will be issued to the Deceased’s estate to gather Capacitor details.

When Capacitor details are held, a P1001 will be sent to the Capacitor to notify them that HMRC will carry out an automatic reconciliation and they will be contacted with the result if it is not Reconciled - Balanced.

When the date of death is entered the system will re-calculate the residency status of the deceased customer. The number of days from 6 April to the date of death will be calculated. If the deceased customer has spent more than half of this period in Scotland, they will be a Scottish taxpayer. If they have spent less than half of this period in Scotland they will not be a Scottish taxpayer.

Personal / domestic employees

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

Employers who have personal / domestic employees operate the simplified PAYE scheme and do not issue a form P45 if the employee leaves. The employer will instead send in a P12 working sheet when they have paid the employee for the last time. You will be sent a P12R from the Employers Section.

Treat this as a form P45, enter the details in the Maintain Employment screen and make the repayment in the usual way.

Job Release Schemes

Never make a cessation repayment to an individual within the job release scheme.

Estimated benefit figures can be used for in-year repayments where benefits are included in the code and the benefits do not fluctuate greatly from year to year. Where an in-year cessation repayment is requested you should apportion the benefit details to the date of leaving; with the exception of medical benefit which should only be apportioned if you have information that it should be. This will relieve the burden on employers as you will only need to contact the employer if the benefits fluctuate greatly from year to year.