HMRC’s new National Insurance and PAYE system enables HMRC to use self assessment (SA) tax return information to update PAYE codes automatically. Thus, as an SA return is filed for 2010/11 the taxpayer’s PAYE code for 2011/2012 will be updated automatically to include other income (such as rental income or interest) and tax relief for payments (such as Gift Aid) based on the amounts in that return.
However, if a taxpayer does not want their other income/reliefs included in the PAYE code then an X is needed in Box 3 on page TR5 of the SA return.
If a taxpayer does want other income/reliefs included in their codes but the amount and/or type have changed from 2011/12, then this further information should be included in the white space at Box 19 of the SA return.
Generally no more than £10,000 of income will be included in the code unless a specific request is made to HMRC. This is subject, however, to the current restrictions that limit the amount included in the code to 50% of the gross pay or where the inclusion of the income would more than double the taxpayer’s liability.
It should be noted that if other income /reliefs were included in the 2010/11 code then these estimates will be automatically carried forward to the 2011/12 code unless HMRC is advised otherwise or until the 2010/11 return is submitted.
However, if a taxpayer does not want their other income/reliefs included in the PAYE code then an X is needed in Box 3 on page TR5 of the SA return.
If a taxpayer does want other income/reliefs included in their codes but the amount and/or type have changed from 2011/12, then this further information should be included in the white space at Box 19 of the SA return.
Generally no more than £10,000 of income will be included in the code unless a specific request is made to HMRC. This is subject, however, to the current restrictions that limit the amount included in the code to 50% of the gross pay or where the inclusion of the income would more than double the taxpayer’s liability.
It should be noted that if other income /reliefs were included in the 2010/11 code then these estimates will be automatically carried forward to the 2011/12 code unless HMRC is advised otherwise or until the 2010/11 return is submitted.
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