New Tax-free Payment Box on the 2005-06 P35
Example 1
Q. I 'self-served' the 2004-05 tax-free payment by taking it from what I sent you. What should I put on the P35?
A. In the field marked 'Tax-free incentive payment received during the year' you should enter £250. The payment should not be included in any other field on the P35.
Example 2
Q. I received the 2004-05 tax-free payment as a cheque payment. What should I put on the P35?
A. Where the cheque payment is for the whole £250, the 'Tax-free incentive payment received during the year' field must be 'zero' filed. It is a mandatory field and if it is left blank the Return will fail our quality checks.
Example 3
Q. What if the cheque payment of the tax-free payment was for less than £250?
A. If, for example, you asked for £150 to be set against your 2005-06 liability and to receive the balance of £100 as a cheque, you must enter £150 in the 2005-06 P35 field 'Tax-free incentive payment received during the year'.
If you had part of the tax-free payment as a cheque, and the balance set against earlier years' arrears (years other than 2005-06), you do not need to enter anything on the P35.
Example 4
Q. What if I 'self-served' the 2004-2005 tax-free payment but have not yet had a tax-free payment award letter?
A. If the award letter has not yet been received, the 'Tax-free incentive payment received during the year' filed on the P35 must be 'zero' filed. It is a mandatory field and if it is left blank the Return will fail our quality checks.
Example 5
Q: What will happen if the 2004-05 tax-free payment is not awarded by the time their 2005-06 Return is submitted?
A. This will only be a problem where you have self-served the tax-free payment, as there will be an underpayment for 2005-06 of £250. When awarded, the 2004-05 payment will be allocated to 2006-07 and you should ask the Accounts Office to re-allocate the payment to 2005-06.
Example 6
Q. What if there is a balance of the tax-free incentive payment at the end of the year?
A. If your 2004-05 Return was filed online and HMRC credited the tax-free payment of £250 to your payment record, but for 2005-06 the 'Total amount payable for the year' on the P35 is only £50, there will be an overpayment of £200. The £200 will be automatically allocated against the 2006-07 payment record.
