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PAYE77036 - PAYE operation: incapacity benefit: form P45(IB)(O) (Action Guide)

On receipt of a P45(IB)(O) follow steps 1 - 12 below.

Note: You should not process the P45(IB)(O) until 20 days after the ‘End Date’ shown.

The guide is presented as follows

Initial action	Steps 1 - 2
Update Employment Summary	Steps 3 - 4
Issue a revised tax code	Steps 5 - 10
Reassessment case	Steps 11 - 12

Initial action

1.	Review CONTACT HISTORY to check the previous action(s) taken
2.	Select the EMPLOYMENT SUMMARY screen to view current employments
	If P45(IB)(O) has been received for a reassessment case, see step 11
	Note: PAYE77035 provides guidance on how to identify a reassessment case.
	If secondary Incapacity Benefit employment is held, see step 3
	If secondary Incapacity Benefit employment is not held, see step 4

Update Employment Summary

3.	If secondary Incapacity Benefit employment is held on the EMPLOYMENT SUMMARY screen
	Press the Edit Record icon next to the Incapacity Benefit employment
	Set the cessation source as ‘User’
	Enter the date of leaving as the date shown on the P45(IB)(O) and [Save]
	Update the CONTACT HISTORY screen to show action taken in accordance with PAYE105020
	See step 5
4.	If a secondary Incapacity Benefit employment is not held on the EMPLOYMENT SUMMARY screen
	Press the [Insert] button so that a secondary employment can be inserted
	Set creation source as ‘User’
	Show PAYE reference as (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
	Show job title as ‘Incapacity Benefit’
	Set the cessation source as ‘User’
	Enter the date of leaving as the date shown on the P45(IB)(O) and [Save]
	Update the CONTACT HISTORY screen to show action taken in accordance with PAYE105020
	See step 5

Issue a revised tax code

	Note: Before issuing a revised code consider the individuals employment history and the previous tax codes operated during the year see PAYE61205
5.	From the IABD LANDING screen select the TAXABLE SOCIAL SECURITY BENEFITS screen for the tax year in which Incapacity Benefit ceased
	Press the Edit Incapacity Benefit Details indicator next to the Incapacity Benefit entry
	If Incapacity Benefit details are held, see step 7
	If Incapacity Benefit details are not held, see step 6 and then step 7
6.	Enter the start date as the first day of the tax year in which P45(IB)(O) end date falls
	Set Type on Incapacity Benefit Award as ‘First’
	See step 7
7.	Enter the End Date as shown on the P45(IB)(O)
	If Incapacity Benefit commenced in CY enter the leaving Incapacity Benefit shown on the P45(IB)(O) into the Benefit Amount field and then see step 8
	If Incapacity Benefit commenced in CY-1 or earlier do not enter the leaving Incapacity Benefit shown on the P45(IB)(O) into the benefit amount. For these cases you should follow the guidance at PAYE130075 and then see step 8
8.	Select [Save] on the TAXABLE SOCIAL SECURITY BENEFITS screen
	[Submit] the IABD LANDING screen
	Review the TAX CODE DETAILS screen, see PAYE11130 and [Submit]
	Review the EDIT EMPLOYMENT ALLOCATION screen to consider the basis of operation for the tax code(s) to be issued, see PAYE13115 and [Submit] to issue the revised tax codes
9.	Next review Incapacity Benefit TAXABLE SOCIAL SECURITY BENEFIT DETAILS screen in IABD for the tax years after the tax year Incapacity Benefit ceased
	If a Benefit Amount greater than zero is held, update the Benefit Amount to 0 (zero) Note: If no Benefit Amount is shown, no update is required
10.	Scrap the P45(IB)(O)

Reassessment case

11.	Select the Edit Record icon next to the Incapacity Benefit employment on the EMPLOYMENT SUMMARY screen
	Remove the P Ceased indicator
	Select cessation source ‘User’
	Enter End Date as shown on P45(IB)(O), [Save]
12.	Scrap the P45(IB)(O) and make a Contact History note ‘Incapacity benefit ceased reassessment case’

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