PAYE11035 - coding: codes: how they are used and calculated: P2 special notes
There are a number of special notes that explain how a
customer’s tax code is made up. These notes replace what you
would have previously entered as P2 freehand notes. You must enter
the exact indicator in CD format 2 for the special note to be
produced. If any text other than the note indicator is entered in
format 2 it will not be shown on the P2. These special notes are in
addition to the standard notes.
You must enter the indicator exactly as it is shown in the
table of special notes; otherwise the appropriate message will not
be included on the customer's P2. The indicator must
- Be spelt exactly
- In capitals
And
- The spacing must be as shown
The note indicators that are input into the format 2 field will
show in the COP coding history, screen CH on the relevant years
record.
If you add the note indicator WIFE in the format 2 field of
the CD screen the following note will be generated on the
customer's P2.
'We have changed your tax code following information recently provided by your wife'.
You can add more than one special note by including all relevant
special note indicators in the format 2 field within the CD screen.
However, there must be at least one space between the indicators
such as WIFE P91. All indicators can be entered on the same line,
or different lines, within format 2.
Where the customer has the standard note indicator NIB in
their code and they are receiving state pension or state benefits,
a further three
special notes are available to you which can be
input into the format 2 field in the CD screen of COP to generate a
further explanation on the customer's P2.
These indicators and examples of when they can be used
are
- EST NIB - where the customer has started to receive the state pension but we have not had the P161 back and so we have estimated the amount that the customer will receive for the year
- NEW BENEFIT - where the customer has started to receive a taxable state benefit and we have estimated the amount that the customer will receive for the year
- NEW NIB - where the customer has started to receive the state pension and we have estimated the amount that the customer will receive for the year
As the facility for freehand notes in COP is no longer available
for the new P2, you may still need to write to a customer
occasionally if a specific circumstance is not covered by a P2
note, or where you need to provide more detailed information. The
EXPLANATION special note indicator should be used to let the
customer know that more information will follow where you need to
issue a separate letter.
For example if you add the note indicator AGENCY in the
format 2 field of the CD screen the agency explanatory special note
will be printed on the customer's P2. See the table below for the
full text of the AGENCY explanatory note.
The table below gives a list of special note indicators to be
used in CD format 2, circumstances when to use the special notes
and explanatory note.
| Special note indicator | Circumstance | P2 Special note |
| AGENT | For acknowledgement of information or contact received from tax adviser | We have changed your tax code following information recently provided by your tax adviser. |
| EMPLOYER | For acknowledgement of information or contact received from employer | We have changed your tax code following information recently provided by your employer. |
| RETURN | For acknowledgement of information or contact received from the tax return | We have changed your tax code using the information in your tax return. |
| YOU | For acknowledgement of information or contact received from the customer | We have changed your tax code following information you recently provided. |
| HUSBAND | For acknowledgement of information or contact received from husband | We have changed your tax code following information recently provided by your husband. |
| WIFE | For acknowledgement of information or contact received from wife | We have changed your tax code following information recently provided by your wife. |
| PARTNER | For acknowledgement of information or contact received from partner | We have changed your tax code following information recently provided by your partner. |
| PARENT | For acknowledgement of information or contact received from parent | We have changed your tax code following information recently provided by your parent. |
| AGENCY | Where the customer is an agency worker | We understand you are working for more than one agency. From now on [EMPLOYER NAME] will use this code number on a special basis to take tax from the payments they make to you. Next year we will tell [EMPLOYER NAME] to use code BR, instead, which means you will pay tax at [BASIC RATE]% on all your [EMPLOYER NAME] income. If you are still working for [EMPLOYER NAME] on 6 April [TAX YEAR END] please contact your main Inland Revenue office and ask them to review your tax. |
| CAR DISCOUNT | Where the standard note
NCAR is present in the customer's code and you add CAR DISCOUNT as
a special note.
See also the table of standard notes at PAYE11040 and the explanatory notes for car benefit. | We understand you have
now, or previously, had a company car from your employer. You have
to pay tax on the benefit of using an employer’s car for your
private motoring. By taking into account the
we have worked out the benefit, after taking off the environmentally friendly car discount, to be £ [DEDUCTION VALUE]. If you want to check our figure please contact us or go to www.hmrc.gov.uk/cars. If you think we have got it wrong, please tell us. |
| CODE ERROR | Where the employer is operating the wrong code. | We believe [EMPLOYER NAME] has been using the wrong tax code, instead of this one, and so insufficient tax may have been taken off their payments to you. Using this tax code now will mean the correct tax is taken off you from now on, but you may owe some tax at the end of the year. (This is because you have had the benefit of too much tax free amount up to now.) We will check and let you know. However, if [EMPLOYER NAME] have used [TAX CODE] (please check your payment advice – the tax code may be shown on them) please let us know. |
| CUMULATIVE | Where the previous pay and tax figures have been received and the code number has been revised to a cumulative basis. | We now have details of your pay and tax from previous employments this year, and we have told [EMPLOYER NAME] that they no longer have to tax you in a special way. [EMPLOYER NAME] will check as soon as possible whether you have paid too much tax this tax year. If you have, you will either pay less tax for a while or they will make you a refund. |
| DATE OF MARRIAGE | Where a reduced amount of married couple’s allowance (MAA or MAE) has been coded because the customer married during the current year. Add DATE OF MARRIAGE as a special note | Married couple’s allowance is due if either spouse was born before 6 April 1935. It is worth up to £[MARRIED COUPLES ALLOWANCE FULL RATE O75 (MAE) OR U75 (MAA) X 10%] in a full year. Because you married in the year it is worth ([£MARRIED COUPLES ALLOWANCE X 10%] (based on the number of months of your marriage in the tax year) to you. You get the married couple’s allowance of £[MARRIED COUPLES ALLOWANCE X 10%] by having [MARRIED COUPLES ALLOWANCE – ALLOWANCE RESTRICTION]) included in your tax free amount. |
| EARLIER YEARS ADJUSTMENT | Where the customer has an
earlier year's adjustment to be included in their code.
Enter EYA and the coding amount in CD format 1. To print the EYA calculation on the P2 you must use the EYA calculator in SEES to copy and paste the EYA calculation to format 2 in COP. If this is not done, the words NOT FOUND will appear on the customer's P2 and no calculation will be included. Where the calculation has been pasted into format 2, no other special notes should be used. The use of the EYA calculation limits the room available on the P2 and so advisers should send a separate letter if required. | Earlier Years Adjustment
Calculation
(Calculation that is displayed in format 2 will be reproduced on the P2) |
| EST NIB | If the standard note NIB is present in the customer's code and you add EST NIB as a special note. | We believe you have started to receive the state pension. The pension is taxable but the Department for Work and Pensions, who pay it to you, cannot take tax off the payments they make. We sent you a form asking about your pension but have not had it back yet. So we have estimated that your pension for the full year would be £[DEDUCTION VALUE] (see above). We know you will not receive the full amount this year but we have reduced your tax free amount by that £[DEDUCTION VALUE] and will tell [EMPLOYER NAME] to tax you in a special way. This will mean you are only taxed on the proportion of the pension you will receive in the year – you are taxed on the pension for the number of months or weeks you get it. Please contact us if you would like another pension enquiry form or if you need help with the one we sent you. |
| NEW NIB | If the standard note NIB is present in the customer's code and you add NEW NIB as a special note. | We know you started to receive a state pension this year. The pension is taxable but the Department for Work and Pensions, who pay it to you, cannot take tax off the payments. We estimate the full pension for this year would be £[DEDUCTION VALUE] (see above). We know you will not receive the full amount this year but we have reduced your tax free amount by that £[DEDUCTION VALUE] and will tell [EMPLOYER NAME] to tax you in a special way. This will mean you are only taxed on the proportion of the pension you will receive in the year – you are taxed on the pension for the number of months or weeks you get it. |
| NEW BENEFIT | If the standard note NIB
is present in the customer's code and you add NEW BENEFIT as a
special note.
For example where the NIB descriptor is used for bereavement benefit or carer’s allowance and it is coded for the first time. | We know you started to receive a taxable state benefit this year. The state benefit is taxable but the Department for Work and Pensions, who pay it to you, cannot take tax off the payments. We estimate the full benefit for this year would be £[DEDUCTION VALUE] (see above). We know you will not receive the full amount this year but we have reduced your tax free amount by that £[DEDUCTION VALUE] and will tell [EMPLOYER NAME] to tax you in a special way. This will mean you are only taxed on the proportion of the benefit you will receive in the year – you are taxed on the benefit for the number of months or weeks you get it. |
| EXPLANATION | Where you need to issue a separate letter to the customer because the P2 notes do not cover the customers specific circumstances, or where we need to provide more detailed information. | We will write to you in more detail about the changes to your tax code. |
| JSA ESTXXXX | Where you have included a
figure of Jobseeker’s allowance in the customers code on a
P6.
XXXX is the estimated amount the signal would be input, for example, as JSA EST 1255 | We believe you have received Jobseeker’s Allowance in this tax year and we are waiting for figures from the Jobcentre Plus. In the meantime we have included an estimate of [£xxxx] in the figures we have given to [EMPLOYER NAME] so they can tax your pay correctly. If you have actual details of the amounts you received, or if you think our figure is wrong, please contact us. |
| NOT OP – XXXX.XX | Where you are not issuing
the code to the employer and the record is for a non-SA customer.
Where XXXX.XX is the amount of the underpayment. | Your tax code has been reduced to [TAX CODE] but [EMPLOYER] will not be able to use the new code this year. That means you will pay about [£ESTIMATED UNDERPAYMENT] less tax than you should do this year. If you send us your P60 (your employer should give you this by 31 May), we will check the position and will then tell you how we propose to collect the underpaid tax. |
| NOT OP – XXXX.XX | Where you are not issuing
the code to the employer and the record is for a SA customer.
Where XXXX.XX is the amount of the underpayment. | Your tax code has been reduced to [TAX CODE] but [EMPLOYER] will not be able to use the new code this year. That means you will pay about [£ESTIMATED UNDERPAYMENT] less tax than you should do this year. We will check the position when we look at this year’s tax return and we will then let you know how we propose to collect the underpaid tax. |
| P45 YY | Where you are requesting
the customer’s P45 part 1.
Where YY is the last two digits of the start of the tax year. For example, where you require P45s for 2006-2007 year, the indicator that should be input into format 2 field of the COP screen CD is P45 06 | Please may we have any original P45 “Employee leaving work” certificates given to you by your previous employer(s) in this tax year (from 6 April [TAX YEAR START DATE]). |
| P60 YY | Where you are requesting
the customer’s P60.
Where YY is the last two digits of the end of the tax year. For example, where you require P60 for 2006-2007 year, the indicator that should be input into format 2 field of the COP screen CD is P60 07 | Please may we have your original P60 End of Year Certificate for the year to 5 April 20[YY] so we can check your tax position. If you had more than one employer or pension provider at that date, please send all your P60s. If you also received employer benefits, please enclose the benefit statement from your employer (known as form P11D) or the equivalent information. |
| P91 | Where the customer has
not returned an employment history form P91.
And where automatic note text C is not present. See the table of automatic notes at PAYE11020. | Please fill in and send back to me your Employment History form (form P91) which was sent to you separately. We will then check whether or not you are paying the right amount of tax. In the meantime, this code number will be used by [EMPLOYER NAME]. |
| P810 | Where you are acknowledging the receipt of form P810 and you have changed the customers code. | Thank you for completing the “Tax review form”, form P810; we have amended your tax code. |
| RETURN | Where you have changed a
customers code using information on their tax return.
You must use the special note indicator RETURN and not SA RETURN. If you enter SA RETURN the software will read SA as JSA and wrongly include the JSA special note. | We have changed your tax code using the information in your tax return. |
