PAYE74026 - PAYE operation: lump sum termination payments: repayment claim following termination payment (Action Guide)
When an in-year repayment claim has been made and you have the
information set out in ‘Repayment Claim Following Termination
Payment’ at
PAYE74025, follow steps 1 - 18 below.
The guide is presented as follows
| Finally ceased but gets pension, or recommenced employment | Steps 1 - 8 |
| Looking for further employment | Steps 9 - 18 |
For details of how to access any of the COP functions use the [Index of Functions] button on the left of the screen.
Finally ceased but gets pension, or recommenced employment
Where the taxpayer has
- Finally ceased employment, but receives an occupational pension
Or
- Recommenced employment
- Ask the employer for cumulative pay, or pension payer for
cumulative pension, and cumulative tax deducted details to date
- Work out the estimated liability for the year on
- Pay in the old employment, including the taxable amount of the lump sum termination payment
Plus
- Current pay / pension to date
- Estimated pay or pension due during the rest of the year
- From the estimated PAYE tax deductions, deduct
- The estimated liability
And
- Any uncleared underpayment from earlier years
- Make a provisional repayment of 90% of the estimated tax
overpaid
- Send an explanation to the taxpayer, with the payable order
- Include a full explanation on the hard copy and file the papers
in the District Record (for a COP case or SA non file case) or in
the file if an SA file exists
- Use COP Function CD to
- Set the POTA signal (for a COP case)
And
- Put the code on a Week 1 / Month 1 basis from the next pay day (this may not be necessary for an occupational pension – the Employer Further Guide to PAYE and NICs (CWG2) advises that Week 1 or Month 1 basis should be applied when the pension payments start
- Issue form P6 to the employer or pension payer
- For COP cases use Function NO to add an essential note to the record using the words ‘POTA (year) TERMINAL PAYT PROVISIONAL REPT’. For SA cases make a prominent SA note ‘(year) Terminal Payt Prov Rept’
Looking for further employment
Where the taxpayer is looking for further employment
- If the taxpayer gets an occupational pension, ensure the code
is operating on a Week 1 or Month 1 basis. Issue form P6 if
necessary (the Employer Further Guide to PAYE and NICs (CWG2)
advises that Week 1 or Month 1 basis should be applied when the
pension payments start
- Work out the estimated liability for the year on
- Pay in the old employment, including the taxable amount of the termination payment. Use the P45 figure
Plus
- Estimated pay and or pension due during the rest of the year
If the taxpayer is looking for full-time employment, assume it will be found within one month and that pay will be at the same rate as the previous employment
- From the estimated PAYE tax deductions, deduct
- The estimated liability
And
- Any uncleared underpayment from earlier years
- Assume that the new employer will deduct tax on a Week 1 or
Month 1 basis
- Make a provisional repayment of 90% of the estimated tax
overpaid
- Enter the code to be applied, including ‘X’ on form
P45
- Send an explanation to the taxpayer, with form P45(2) and (3), and the payable order
The explanation should state the basis on which you worked out the repayment calculation. Advise that a further provisional repayment, on a reduced estimate of pay for the rest of the year, will be made if employment is not found after another month
- File the papers in the District Record if a COP case or SA non
file case, or in the file if an SA file exists
- Use COP Function CD
- To set the POTA signal for a COP case
And
- To put the code on a Week 1 / Month 1 basis
- Use COP Function NO to add an essential note to the record using the words ‘POTA (year) TERMINAL PAYT PROVISIONAL REPT’. If an SA case make a similar SA note
