PAYE76087 - PAYE operation: pensioners: coding of NIB in the first year of receipt (Action Guide)

When NIB commences follow steps 1 - 11 below, as appropriate.

Notes:

1. When annual NIB is coded (in the first year received) never retain a potential underpayment as it defeats the object of coding the annual amount
   
2. Where age related allowances are due in a reduced amount because of the level of ESTINC you should enter the full amount of the allowances at the time of recoding together with the ESTINC. Automatic processing will then calculate the correct amount of reduced allowances
   
3. If a P161 is received and NIB is due to start within two months you should BF the case and code the NIB and any age allowance due together at the time when NIB commences. Exceptionally, if the P161 is received more than two months before NIB is due to commence you must code any age allowance due and then BF to recode to include the NIB when it starts

The guide is presented as follows

Initial action

1. Review the coding for the year. Remember to withdraw any FRE, PSUB, EXPS or TIPS no longer due
   
2. Check taxpayer’s NSI and ascertain if age related allowances are due

Note: In cases where IB has been paid up to and including the day before NIB commences you must apportion the IB and code the actual IB and actual NIB. Where the net coding allowances are increased, issue the code on a cumulative basis

Age related allowances are due and already in CY code

This includes all cases which have already been coded to give age related allowances and that code has been operated prior to the further amendment of the code to include NIB

3. Determine if taxpayer liable to tax

4. If taxpayer is liable to tax

Note: If there has been a delay in coding NIB and / or a delay in operation of the code is expected, consider coding actual NIB on Week 1 basis with a potential underpayment. (A delay in this case is coding / operating a code more than one month after the first payment of NIB is due)

5. If taxpayer is not liable to tax

Age related allowances are due but are not already in CY code

6. Determine if taxpayer liable to tax

7. If taxpayer is liable to tax

8. If taxpayer is not liable to tax

Age related allowances are not due

9. Determine if taxpayer liable to tax

10. If taxpayer is liable to tax

Note: If there has been a delay in coding NIB and / or delay in operation of the code is expected or the taxpayer was previously NNL but the NIB now makes them liable, consider coding actual NIB on Week 1 basis with a recalculated potential underpayment. (A delay in this case is coding / operating a code more than one month after the first payment of NIB is due)

11. If taxpayer is not liable to tax