PAYE11105 - Coding: codes: how they are used and calculated: code reductions

Cumulative code is reduced or not operated code is reduced

And

The potential underpayment to date of change is less than £15

Cumulative coding operates.

Today's date is 6 January or later in the tax year

And

Potential underpayment to date of change £15 or more

But

Extra tax due to end of year is less than £100 from date of change

NOT OPERATED code basis given. Potential underpayment for the full year is calculated but not advised to the individual automatically on the form P2.

To generate a note on the P2, enter the special note NOT OP. Further information on how to do this can be found at PAYE11035.

All other times

WK1/MTH1 basis operated. Potential underpayment to the date of change is calculated and advised to individual on the form P2.

WK1/MTH1 code is reduced

The WK1/MTH1 basis continues to be applied.

Reduction to code BR and WK1/MTH1 basis

Code 0T will be allocated automatically.

Where code 0T is entered in the code field of a secondary employment record

The WK1/MTH1 basis is given.

Situation

Text

New suffix code less than last operated code

And

Week 1/ Month 1 basis allocated

And

There is a potential underpayment. For example, code 500T becomes 385T WK 1, Potential underpayment £135

And

SA indicator on record

We have changed your tax code and your tax free amount for the year has gone down. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will have had the benefit of too much tax free amount, and therefore owe some tax. We work this out to be about £ [ESTIMATED UNDERPAYMENT] but we will check when we look at your tax return for the year to 5 April [TAX YEAR END DATE]. Once [EMPLOYER NAME] use the new code you will get a proportion of the new tax free amount (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on

New K Code higher than last operated code

And

Week 1/ Month 1 basis allocated

And

There is a potential underpayment. For example, code K150 becomes K200, potential underpayment £120

And

SA indicator on record

We have changed your tax code and your “tax is due on” amount for the year has gone up. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will not have paid enough tax. We work this out to be about £ [ESTIMATED UNDERPAYMENT] but we will check when we look at your tax return for the year to 5April [TAX YEAR END DATE].

Once [EMPLOYER NAME] use the new code you will be taxed on a proportion of the new tax is due on figure (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on.

New suffix or K code higher than last operated code but remaining on a Week1 / Month1 basis with potential underpayment reducing

And

SA indicator on record

We have changed your tax code again and your tax free amount for the year has changed. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will have had the benefit of too much tax free amount, and therefore owe a different amount of tax. We have worked the revised underpayment to be about £ [ESTIMATED UNDERPAYMENT] but we will check when we look at your tax return for the year to 5April [TAX YEAR END DATE]. Once [EMPLOYER NAME] use the new code you will get a proportion of the new tax free amount (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on.

New suffix code less than last operated code

And

Week 1/ Month 1 basis allocated

And

There is a potential underpayment. For example, code 500T becomes 385T WK 1, potential underpayment £135

And

SA indicator is not set

We have changed your tax code and your tax free amount for the year has gone down. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will have had the benefit of too much tax free amount, and therefore owe some tax. We work this out to be about £ [ESTIMATED UNDERPAYMENT] but we will check after the end of the year and let you know. Once [EMPLOYER NAME] use the new code you will get a proportion of the new tax free amount (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on.

New K Code higher than last operated code

And

Week 1/Month 1 basis allocated

And

There is a potential underpayment. For example, code K150 becomes K200, potential underpayment £120

And

SA indicator is not set

We have changed your tax code and your “tax is due on” amount for the year has gone up. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will not have paid enough tax. We work this out to be about £ [ESTIMATED UNDERPAYMENT] but we will check after the end of the year and let you know. Once [EMPLOYER NAME] use the new code you will be taxed on a proportion of the new tax is due on figure (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on.

Week 1/ Month 1 basis allocated without a potential underpayment and special note P91 is not present

And

The code does not contain state pension / state benefits. For example the individual has started a new job but has not handed in a form P45 and

• You are trying to get previous pay and tax details

We have told [EMPLOYER NAME] to use this code on a special basis. This is because we do not yet have details of any tax you may have already paid this year. When we do, we will tell [EMPLOYER NAME] who will check and if there is a repayment due to you, it will be paid on the next available pay date. Please contact us if you want to talk about this.

Week 1/Month 1 basis allocated without a potential underpayment

And

The code does not contain state pension / state benefits. For example the individual has started a new job but has not handed in a form P45 and

• You are trying to get previous pay and tax details

And

• You have entered the special note P91

We have told [EMPLOYER NAME] to use this code on a special basis. This is because we do not know if you have paid any PAYE tax already this year. We have asked you for your employment details since 6 April [TAX YEAR START DATE] but have not yet received your reply. When we do, we can find out and then ask [EMPLOYER NAME] to check your overall tax position. If there is a repayment due to you, it will be paid on the next available pay date. Please contact us if you want to talk about this.

New suffix or K code higher than last operated code but remaining on a Week1 / Month1 basis with potential underpayment reducing

And

SA indicator not on record

We have changed your tax code again and your tax free amount for the year has changed. This means that between 6 April [TAX YEAR START DATE] and the date [EMPLOYER NAME] used the old code for the last time you will have had the benefit of too much tax free amount, and therefore owe a different amount of tax. We have worked out the revised underpayment to be about £ [ESTIMATED UNDERPAYMENT] but we will check after the end of the year and let you know. Once [EMPLOYER NAME] use the new code you will get a proportion of the new tax free amount (we tell them to use your new code on a special basis) and the tax taken off you should be right from then on.

Code is for CY+1

This tax code is for the year starting on 6 April next.

Situation

Action you should take

Code change follows an in-year Budget

None. There may be a centrally generated note.

Not Operated code is allocated by system and full year's potential underpayment is coded out in CY+1

If you decide to keep the Not Operated basis, enter the special note NOTOP and the amount. Further information on how to do this can be found at PAYE11035 

Only the suffix changes

None unless you wish to issue a letter

Potential underpayment to date of change more than £15 but potential underpayment from date of change to end of year is less that £100

Decide whether you want to change this basis. Take into account such factors as

• The amount of the potential underpayment
• The date of the code change

Suffix code increases (or K code decreases)and remains cumulative

None unless you wish to issue a letter

Suffix code decreases (or K code increases) but remains cumulative. This will be where the potential underpayment is less than £15.

None unless you wish to issue a letter