PAYE13010 - coding: coding: general principles: annual coding
This subject is presented as follows
General
Initial Review
Main Review
State Pension / NIB uprating
Supplementary Review
General
PAYE Business Guidance Notes (BGN) are issued each year to
provide detailed instructions regarding Annual and Budget recoding.
They include the dates of each review made by the computer. Every
record, except where the PCESS signal is set or it is a P204
record, is reviewed by the computer to determine the code for next
year.
If the computer cannot determine a code, lists of cases are
sent to the office. At initial and main reviews the lists are
produced at the Data Centre, but at supplementary review the lists
are produced on the office printer. Nil lists are not produced.
The lists show
- Employer reference
- Taxpayer's name
- Taxpayer's NINO
- Reason for entry on the list
They also identify
- Inspector cases by showing an asterisk (*) before the taxpayer's name
- Jobseekers Allowance claimants by showing a dollar sign ($) before the taxpayer's name
Review each case on the Exception Lists following the instructions given in the Annual and Budget Recoding Business Guidance Notes (BGN) and the appropriate Action Guide which can be found in this section of the manual. Annual and Budget Recoding work using COP Function CD is not supervisable. To supervise work carried out on listed cases, select cases from the list and use COP Function CD for CY+1 to check the work done.
Initial Review
The Initial Review identifies cases where action is required so
that next year's code can be worked out at the Main and
Supplementary Reviews.
The review can result in
- Taxpayer records showing updated details of
-
- CY+1 Flat Rate Expenses (including those cases where FRE has been deleted)
- Certain age related allowances
- ESTPAY
- A list detailing cases where
-
- Personal reliefs are found to be inconsistent with DOB / SDOB on the taxpayer record
- Certain coding items or signals are present
You must complete all manual action before the date of the Main Review. This date is given in the Annual Coding Initial Review Memo.
Main Review
The main review is a process to allocate a code for CY+1. With
the exception of permanent cessation, deceased and P204 cases,
every taxpayer's record (including live sub-source and main source
leavers) will be reviewed 4 to 6 weeks after the Initial review,
and where possible the appropriate allowances, deductions and
adjustments for CY+1 determined and a code computed. Where a code
cannot be automatically computed the case will be listed on the
Coding Failures list.
The Main Review will take place before the National Insurance
Benefit (NIB) and Incapacity Benefit (IB) uprating. A code will not
be entered if there is NIB or IB in the coding. Codes not finalised
by this review will be finalised either by the Supplementary Review
or by COP Function CD in the intervening period.
Where there is a change of code a notice of coding is issued
to the taxpayer, and in appropriate cases a copy to an agent.
If the only change is a Budget adjustment of personal reliefs
no coding notification is issued. Each live employer, Department
for Work and Pensions (DWP) or DWP Office will be given authority
on the lines of the P7X procedure to adjust certain suffix codes at
the following 6 April.
The following lists can be produced
- Coding Failures list (Exception List Type l)
- P2 Inhibited list (Exception List Type 2)
- NT Codes Carried Forward list (Exception List Type 3)
- Specific lists arising from Budget changes each year
State Pension / NIB uprating
This process is carried out each year towards the end of January
after Annual Coding - Main Review.
Where NIB or IB is included as a deduction in the taxpayer's
CY+1 coding record, it updates the amount of NIB or IB for CY+1 in
accordance with the pension details on the DWP file. Where details
are not available on the DWP file, the amount of NIB or IB in the
CY+1 coding record is uprated by an appropriate percentage agreed
each year.
The review results in
- Automatic update of the amount of NIB and IB in the CY+1 coding record either in accordance with the pension details on the DWP file or by an appropriate percentage
- Setting of the signals NIBACT or NIBEST on the CY+1 coding record depending on the method used to increase the amount of NIB or IB
- Production of Exception Lists where clerical action is required
Supplementary Review
The purpose of this review is to ensure that a CY+1 code is
present for all employments in preparation for the Annual CY+1 Code
Issue to Employers, DWP and DWP Offices. In most cases, other than
where NIB or IB is in the coding, a code will already be present as
a result of the Main Review or subsequent action.
When there is no CY+1 code, this review will attempt to
calculate one and, if appropriate, issue a notice of coding to the
taxpayer, and if appropriate an agent. Where it is not possible to
calculate a code, either the CY code will be carried forward or if
there is no CY code present, the basic allowances only will be
allocated in the case of main records, or code BR in the case of
SUB records. In cases where the SCOTTISH-RATE-IND signal is set for
CY+1 any CY+1 code will include the S prefix.
Where coding is not possible, each office will receive a list
of cases showing the reason for listing the case and the CY and
CY+1 codes.
