PAYE90025 - taxpayer end of year: taxpayer underpayments: PAYE underpayments of £2,000 and over
Only underpayments of up to £1999.99 can be recovered
through the tax code where the underpayment is from the SA
balancing payment for a single year or informal calculations for
one or more years have been issued and the underpayment is up to
£1999.99.
Potential underpayments are not included in the £1999.99
limit and it is possible that £2000 or more can be included in
a code where a potential underpayment arises. For example, where an
informal calculation has been issued for CY-1 and the CY code has
been reduced to include benefits in kind and a CY potential
underpayment has been calculated. The CY+1 code will include the
total underpayment from CY-1 and CY. See example below
| Informal calculation underpayment CY-1 | £1850.00 |
| Potential underpayment CY | £350.00 |
| Total underpayment coded CY+1 | £2200.00 |
Where an
actual underpayment of £2000 or more arises,
the PAYE Regulations state that the underpayment must
not be collected through the tax code. The
underpayment should be collected through SA unless a direct
voluntary payment is made. This applies whether the underpayment
covers one or more years. An SA return will need to be issued for
each year for which a P800 has been issued.
Further information is given at
PAYE90026.
