SAM121660 - Returns: individuals returns: earlier years adjustment (EYA) in code

An adjustment for Flat Rate Expenses or other expenses due for earlier years can be included in the current year code under the PAYE Service descriptor Earlier Years Adjustment. The adjustment is separate from the amount of Flat Rate Expenses (FRE) or other expenses (EXP) due for the current year.

The adjustment can be made manually or by an automatic process whereby an employer (after HMRC has calculated the yearly amounts), can prepare a tape with the adjustment for earlier years in respect of Flat Rate Expenses or other expenses for each of the relevant employees. The tape is run against the PAYE Service and the current year code automatically updated.

The adjustment, coded for the current year, includes the amount repayable plus any supplement converted to a code adjustment.

The return does not mention these adjustments and the taxpayer may contact you for advice.

You should advise the taxpayer to enter details of the claim in the Additional Information Box on the return.

The adjustment is an overpayment of tax in respect of earlier years and does not effect the taxpayer’s self assessment for the return year.

For cases where the taxpayer does not enter details in the Additional Information Box you will only be able to identify a case when carrying out the Coding (Integrity) Check. The return is not unsatisfactory if the EYA is not on the return.

When you capture the return it is necessary to treat the overpayment of tax, plus supplement, relating to the EYA as additional PAYE tax and to explain the adjustment to the taxpayer using a Customer Service Message (SAM121435).