PAYE94045 - Reconcile individual: in-year reconciliation: trivial commutation payments
For in-year repayment claims in respect of higher rate tax deducted from lump sum payments, see SPD 7d.
The ‘Trivial commutation repayment Calculation (Action Guide)’ has been replaced by SPD 7c (PDF 55KB) which is available on the Personal Tax Operations Guidance Gateway.
In-year repayment requests
Many individuals who receive trivial commutation payments will have little or no other taxable income and because of the way in which PAYE operates, the tax deducted from the trivial commutation payment may exceed the actual liability. For example, it will be possible for higher rate tax to have been deducted because of the level of trivial commutation payment received in that single week, but the individual may only be liable at the basic rate.
In these circumstances, an early repayment of excess tax deducted from the trivial commutation payment can be made to the individual.
Where the individual has a live SA interest, from 6 April 2009 an in-year repayment can be made. Any repayment due should be entered on the SA record using SA Function CREATE FREESTANDING CREDIT. The return for the year should be processed in the usual way after the end of the year when it has been returned. This also applies to individuals that have a PAYE source and an SA interest.
The form P45 will tell the individual to ask for form P50 to request a repayment. This form however, will not be appropriate when an in-year payment is requested because the individual may not be able to sign the relevant declaration. You should therefore establish why the individual thinks that a repayment is due.
If the reason for requesting a repayment is because of a trivial commutation payment, use form P53 (this form replaces forms P53A and P53B), which is available on Office Clerical Assistant (OCA), so that these individuals can provide us with details of their other income. The form can be used either
- To provide estimated details of income, during the year, for early repayment
- After the end of the year, to check details previously provided. The form is only issued after the end of the year if one has already been issued in-year
Note: When making an in-year repayment in a Trivial Commutation case, estimated figures can be used. This is unlike an in-year cessation repayment where we use actual figures. The in-year repayment cannot be issued from the PAYE Service and a manual reconciliation will need to be prepared.
Form P53 recognises that the information will be estimated for in-year repayments and advises that we will check the position again after the end of the tax year. The individual must sign the declaration on the form, and return it along with forms P45 Parts 2 and 3, which are required before any repayment can be made.
When you issue form P53 to the individual you must ask them to return it to their current PAYE office which is not necessarily the office where the pension / annuity reference is held.
P53 claims using estimated income near the end of the tax year
P53 claims received leading up to and shortly after the end of the tax year should be dealt with as normal using the estimated figures that have been provided. This will avoid delays in the individual receiving their repayment and will avoid any unnecessary contact with the employer.
P53 issued at the end of the tax year
Where an in-year trivial commutation repayment has been issued, using estimated figures from the in-year P53, the end of year version of the P53 is issued at the end of the tax year so that the estimated figures can be checked. A paper BF (PAYE105520) is required to trigger the issue of this form as this will not be issued automatically where the in-year trivial commutation has been dealt with manually. There is no need to create a paper BF if the P53 is not returned as the case will be picked up at end of year reconciliation.
P53 request from a non-resident
If the individual is a non-resident, you must not issue a form P53 as this does not contain enough information to deal with the claim. If the individual contacts you, refer to PAYE81000.