PAYE13076 - coding: coding: general principles: higher rate taxpayers (Action Guide)

To calculate the basic rate restriction for a higher rate taxpayer, follow steps 1 - 8 below

There are three calculations to make

• Calculation of highest rate chargeable at main or only source
• Calculation of adjustments
• Calculation of basic rate restriction (BRR)

Calculation of highest rate chargeable at main or only source

1. Estimate the pay at the main or only source
   
2. Deduct total net coding allowances
   
3. Using the rates chargeable for the year, calculate the highest rate due at this source

Calculation of adjustments

4. Calculate the appropriate deduction using either

Or

Calculation of basic rate restriction (BRR)

5. Calculate tax due in accordance with the tax tables at each coded source (A)
   
6. Calculate tax actually due (B)
   
7. Take A away from B to arrive at C. C is the amount of tax that will be underdeducted if no restriction put into the code
   
8. Multiply C by 100 and divide by the rate of liability at the main source to arrive at D. D is the amount of the BRR to be entered in the code