Legalize / United Kingdom / Statutory-Instrument

The Income Tax (Pay As You Earn) Regulations 2003

Type Statutory-Instrument

Publication 2003-10-21

Last updated 2026-04-06

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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(2) This regulation also applies if there is a change in the pension payer who pays a pension to a pensioner.

(3) The change is not to be treated as a cessation of employment for the purposes of regulation 36 (cessation of employment: Form P45).

(4) The new employer is, in relation to any matter arising after the change, liable to do anything which the former employer would have been liable to do under these Regulations if the change had not taken place.

(5) Paragraph (4) is subject to paragraphs (6) and (7) and regulation 104 (succession to a business: trade disputes).

(6) The new employer is not liable for the payment of any tax which was deductible from relevant payments made to the employee—

(a) before the change took place, unless those payments were made by the new employer, or

(b) by the former employer after the change took place.

(7) The new employer is not liable for the payment of any tax which was to be deducted or accounted for in accordance with regulation 62(4) or (5) (notional payments) in respect of notional payments made to the employee—

(a) before the change took place, unless those payments were made by the new employer, or

(b) by the former employer after the change took place.

(8) The former employer must give the new employer any particulars which the new employer needs in order to comply with this regulation.

(9) In paragraph (1), “business” includes any trade, concern or undertaking.

Death and succession

103

(1) Regulation 101 (death of employer) does not affect the operation of regulation 102 (succession to a business etc) for the purposes of which the deceased employer’s personal representative or the principal may also be the new employer.

(2) But paragraph (3) applies where a person (“P”) is both the new employer and also the deceased employer’s personal representative or the principal.

(3) Paragraphs (6) and (7) of regulation 102 (new employer not liable for certain payments of tax) do not apply to P in P’s capacity as personal representative or principal.

(4) “Principal” has the same meaning as in regulation 101.

Succession to a business: trade disputes

104

(1) This regulation applies if a trade dispute began, but did not end, before a change to which regulation 102 (succession to a business etc) applies took place.

(2) The former employer must comply with regulations 64(8) (trade disputes: payments to Revenue) and 75 (additional return in case of trade dispute) as though the time limit of 42 days ran out on the date on which the change took place.

(3) The new employer is liable to repay, in accordance with regulation 64, any tax that was withheld in the tax year in which the change took place by the former employer.

(4) The new employer may recover from the Board of Inland Revenue an amount repayable under paragraph (3), as if it were an amount recoverable under regulation 67G(3)(b) , as adjusted by regulation 67H(2) where appropriate, (payments to and recoveries from HMRC for each tax period by Real Time Information employers) or, as the case may be, 68(3)(b) (periodic payments to and recoveries from Revenue).

(5) But any amount recovered under paragraph (4) must be ignored when determining how much the new employer must pay or can recover under regulation 67G or 68.

PART 6 — PAYE SETTLEMENT AGREEMENTS

Making and effect of PSA

Inland Revenue and employer may make PSA

105

(1) HMRC and an employer may agree that paragraph (2) applies in respect of income tax on qualifying general earnings of the employer’s employees for a tax year and for any subsequent tax years.

(2) In relation to qualifying general earnings included in the agreement, the employer is—

(a) accountable to HMRC in accordance with the terms of the agreement and this Part, and

(b) not accountable in accordance with the rest of these Regulations.

(3) Such an agreement is referred to as a PAYE settlement agreement (“PSA”).

(4) A PSA will continue to have effect until cancelled.

Qualifying general earnings

106

(1) Qualifying general earnings are those general earnings which meet conditions A and B.

(2) Condition A is that the general earnings consist of—

(a) taxable benefits provided or made available by reason of employments with the employer, or

(b) expenses paid to persons holding those employments.

(3) Condition B is that the employer and the Inland Revenue agree that the general earnings are—

(a) minor, as regards the amount of the sums paid or the type of benefit provided or made available,

(b) irregular, as regards the frequency in which, or the times at which, the sums are paid or the benefit is provided or made available,

(d) in the case of a benefit provided or made available, shared between employees so that apportionment of the benefit between the employees is impracticable.

(4) “Taxable benefit”, in relation to an employee, means any benefit provided or made available, other than in the form of a payment of money, to the employee or to a person who is a member of the employee’s family or household.

(5) General earnings to which regulation 112(2)(a) or (b) (pre-agreement general earnings etc) apply are not qualifying general earnings.

Effect of PSA

107

(1) Qualifying general earnings included in the PSA are treated as excluded from an employee’s income for the purposes of determining the amount of the employee’s liability to income tax for the tax years to which the PSA relates.

(2) But this does not affect—

(a) the chargeability of those qualifying general earnings to income tax, or

(b) the employer’s liability under the PSA to account for income tax in respect of those qualifying general earnings.

(3) Sums in respect of income tax for which an employer is accountable to HMRC under a PSA are not to be treated, for the purposes of these Regulations, as tax deducted from relevant payments.

(4) An employee has no right to be treated as having paid tax in respect of sums for which the employer is accountable under a PSA, and accordingly is not entitled to claim or receive any refund of tax paid by the employer under the PSA.

(5) An employee must, subject to paragraph (6), be treated as relieved from any obligations under the Income Tax Acts—

(a) to keep records containing information relating to qualifying general earnings included in a PSA, or

(b) to deliver returns in respect of those qualifying general earnings.

(6) Paragraph (5) does not apply for the purposes of the obligations imposed on the employer under regulation 117 (retention of PSA records).

(7) Qualifying general earnings comprised in a PSA are not to be included—

(a) in a return by the employer under regulation 67B, 67D, 67E, 73, 74, or 75 (returns of relevant payments and tax deducted), nor

(b) in particulars provided by the employer under regulation 85 (annual return of other earnings (Form P11D)).

Payment of tax under PSA

Calculation of tax payable under PSA

108

(1) A PSA must provide that the employer is accountable to HMRC for the income tax due.

(1A) A PSA must provide for the sums due to be—

(a) computed annually in accordance with the factors specified in paragraph (2), and

(b) comprised of the amounts specified in paragraph (3)

(2) The factors are—

(a) in the case of qualifying general earnings comprising sums paid in respect of expenses, the estimated aggregate amount of such payments on which income tax is chargeable, reduced by such amount (if any) as would have been deductible if the qualifying general earnings had not been included in the PSA;

(b) in the case of qualifying general earnings comprising benefits provided or made available, the estimated aggregate amount of the cash equivalents and other amounts on which income tax is chargeable, reduced by such amount (if any) as would have been deductible if the qualifying general earnings had not been included in the PSA;

(d) the number of those employees respectively chargeable to income tax—

(i) at only the basic rate for the tax year to which the computation relates, and

(ii) at both the basic rate and the higher rate for that tax year; and

(iii) at the basic, higher and additional rates for that tax year; and

(iv) at any Scottish rate applicable for the tax year to which the computation relates; and

(v) at any Welsh rate applicable for the tax year to which the computation relates;

(e) such other matters as are agreed by HMRC and the employer to be relevant in relation to the qualifying general earnings comprised in the PSA.

(3) The amounts specified for the purposes of paragraph (1A)(b) are—

(a) an amount equal to income tax on the aggregate of the amounts computed in accordance with paragraph (2)(a) and (b), calculated so as to take account of the factor specified in paragraph (2)(d); and

(b) a further amount reflecting an estimate of the income tax on the benefit to the employees of having no tax liability on the qualifying general earnings included in the PSA.

Payment of tax and recovery proceedings

109

(1) The employer must pay to HMRC by the due date the aggregate amount for which the employer is accountable to HMRC under a PSA in relation to the preceding tax year.

(2) “The due date” means 19th October following the end of each tax year to which the computation relates.

(3) Part 6 of TMA (collection and recovery) applies to the recovery of the aggregate amount or any part of it (“the amount of tax”) as if it were income tax charged on the employer.

(4) But summary proceedings for the recovery of the amount of tax may be brought in England, Wales or Northern Ireland at any time before the expiry of 12 months beginning with the due date.

(5) Proceedings may be brought for the recovery of the amount of tax without distinguishing the amounts which the employer is liable to pay in respect of each employee under the PSA and without specifying the employees in question.

(6) The amount of tax is one cause of action or one matter of complaint for the purposes of proceedings under sections 65, 66 and 67 of TMA[^f00050] (magistrates' courts, county courts and inferior courts in Scotland).

Formal determination of tax payable by the employer

110

(1) This regulation applies if it appears to the Inland Revenue that there may be an amount payable under regulation 109(1) for any tax year which has not been paid by the due date (as defined by regulation 109(2)).

(2) The Inland Revenue may determine the amount payable to the best of their judgment.

(3) If a determination is made, the Inland Revenue must serve notice of it on the employer.

(4) A determination under this regulation is subject to Parts 4, 5 , 5A and 6 of TMA (assessment, appeals, collection and recovery) as if—

(a) the determination were an assessment, and

(b) the amount determined were income tax charged on the employer,

and those Parts of TMA apply accordingly with any necessary modifications.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form and commencement of PSA

Form of PSA

111

(1) A PSA must be—

(a) in writing, and

(b) signed and dated by the employer and HMRC.

(2) A PSA must incorporate, whether by specification or indirect reference—

(a) the qualifying general earnings included in the PSA,

(b) the method of calculation, determined in accordance with regulation 108, of the amount of income tax for which the employer is to be accountable in respect of those qualifying general earnings, and

(c) the due date by which, in accordance with regulation 109, income tax in respect of those qualifying general earnings is due and payable.

(3) In paragraph (1) “in writing” includes electronic communications and “signed” includes electronic signatures.

Commencement of PSA

112

(1) A PSA may be entered into at any time before 6th July following the end of the first tax year for which it is to have effect (“the year in question”).

(2) A PSA entered into after the beginning of the year in question cannot apply to—

(a) general earnings which, when the PSA is entered into, have been, or should have been, paid earlier in the year in question under deduction of tax in accordance with Part 3, or

(b) general earnings consisting of benefits which, when the PSA is entered into, are or were reflected in the employee’s code for the year in question in accordance with Part 2.

Variation and cancellation of PSA

Variation of PSA

113

(1) HMRC and the employer may, by agreement and consistently with the provisions of this Part, vary the terms of a PSA entered into by them.

(2) The agreement must be—

(a) in writing, and

(b) signed and dated by the employer and by HMRC.

(3) The last date for variation of a PSA is 6th July following the end of the first tax year to which the variation relates ....

(4) In paragraph (2) “in writing” includes electronic communications and “signed” includes electronic signatures.

Cancellation of PSA

114

(1) Either HMRC or the employer may cancel a PSA.

(2) Cancellation must be effected by a notice in writing to the other party.

(3) A cancellation comes into effect from the date of the notice.

(4) If a PSA is cancelled, this Part does not apply to general earnings—

(a) to which the cancelled PSA related, and

(b) which are paid, or (as the case may be) provided or made available, after the employer receives notice of the cancellation.

(5) In paragraph (2) “in writing” includes electronic communications.

Interest

Interest on unpaid tax

115

(1) This regulation applies if an employer has not paid to the Inland Revenue by the due date (as defined by regulation 109(2)) the full amount for which the employer is liable under this Part.

(2) The unpaid amount carries interest at the prescribed rate from the due date until payment (“the interest period”).

(3) Paragraph (2) applies even if the due date is a non-business day as defined by section 92 of the Bills of Exchange Act 1882[^f00052].

(4) Any change made to the prescribed rate during the interest period applies to the unpaid amount from the date of the change.

(5) Interest is recoverable as if it were an amount payable under the PSA.

(6) “The prescribed rate” means the rate applicable under section 178 of the Finance Act 1989[^f00053] for the purposes of section 86 of TMA[^f00054].

Interest on overpaid tax

116

(1) This regulation applies if tax in respect of a tax year to which a PSA relates is repaid to the employer after the due date (as defined by regulation 109(2)).

(2) The tax repaid carries interest at the prescribed rate from the later of—

(a) the due date for a tax year, and

(b) the date on which the tax was paid,

until the order for the repayment is issued (“the interest period”).

(3) Any change made to the prescribed rate during the interest period applies to the tax repaid from the date of the change.

(4) “The prescribed rate” means the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 824 of ICTA[^f00055].

Records

Inspection of PSA records

117

(1) An employer must keep PSA records for not less than 3 years after the end of the most recent tax year to which they relate.

(2) “PSA records” means all books, documents and other records relating to—

(a) the qualifying general earnings comprised in the PSA,

(b) the calculation of amounts for which the employer is accountable to HMRC in accordance with the PSA, and

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 7 — SPECIAL CASES

CHAPTER 1 — COUNCILLORS' ALLOWANCES

Interpretation of Chapter 1

118

(1) In this Chapter—

“allowances” means—payments by way of attendance allowance within section 173(1) or 175(1) of the Local Government Act 1972[^f00056],payments within regulations made under section 18(1) of the Local Government and Housing Act 1989[^f00057],payments within regulations made under section 100(1)(a) or (c) of the Local Government Act 2000[^f00058],payments by way of attendance allowance within section 47(1) of the Local Government (Scotland) Act 1973[^f00059], orpayments within regulation 3(1), 4(1) or 5(1) of the Local Government (Payments to Councillors) Regulations (Northern Ireland) 1999[^f00060];

“councillor” means a person entitled to receive any allowances;

“local council” means the local authority, council, joint authority or joint committee paying allowances.

(2) For the purposes of paragraph (1)—

“council” and “joint committee” are to be read in accordance with section 148(1) of the Local Government Act (Northern Ireland) 1972[^f00061]; and

“local authority” in England and Wales has the meaning given in section 270(1) of the Local Government Act 1972[^f00062], and in Scotland has the meaning given in section 235(1) of the Local Government (Scotland) Act 1973[^f00063].

Councillor’s option to have tax deducted at basic rate

119

(1) A councillor may, by notice to the Inland Revenue, opt to have income tax deducted from allowances at the basic rate in force at the time of payment of the allowances (the “basic rate option”).

(2) On receiving any such notice the Inland Revenue must give notice to the local council of the councillor’s exercise of the basic rate option.

(3) On receiving a notice under paragraph (2), the local council must, when making any payment of allowances to the councillor, deduct income tax at the basic rate in force at the time of that payment on the non-cumulative basis.

(4) Paragraph (5) applies if—

(a) a councillor has exercised the basic rate option, and

(b) the Inland Revenue consider that the councillor may incur deductible expenses.

(5) The Inland Revenue may direct the local council to disregard an appropriate amount of the allowances in calculating the tax to be deducted.

(6) In paragraph (4)(b), “deductible expenses” means expenses of a kind which would be deductible under sections 336 to 338 of ITEPA (expenses incurred wholly, exclusively and necessarily in performance of duties, and travel expenses).

Particulars that local council must record

120

(1) This regulation applies if the Inland Revenue have given notice to the local council of the exercise by a councillor of the basic rate option.

(2) The local council must record, in a deductions working sheet (which it must prepare for the purpose unless it has already prepared one) the following particulars about every payment of allowances which it makes to the councillor.

(3) The particulars are—

(a) the councillor’s name,

(b) the councillor’s national insurance number, if known,

(d) the amount of the allowances,

(e) where regulation 119(5) applies, the net amount of the allowances from which tax has been deducted, and

(f) the amount of tax deducted from the allowances.

Regulations apply as if basic rate option were issue of code

121

If a councillor exercises the basic rate option, these Regulations apply as if the Inland Revenue had issued the basic rate code in respect of the allowances.

CHAPTER 2 — RESERVE FORCES' PAY

Interpretation of Chapter 2

122

(1) In this Chapter—

“the Ministry” means the Ministry of Defence;

“reserve forces” means the forces specified in paragraph (2);

“reserve pay” means relevant payments made by the Ministry to members of the reserve forces , excluding such payments made on 6 April 2009 or later;

“reservist” means any person in receipt of reserve pay, but does not include a person who is not resident in the United Kingdom and is serving outside the United Kingdom.

(2) The forces specified in this paragraph are—

(a) the Royal Naval Reserve (including Queen Alexandra’s Royal Naval Nursing Service Reserve),

(b) the Royal Marines Reserve,

(d) the Royal Auxiliary Air Force,

(e) the University Air Squadron, and

(f) Officers, Adult Instructors and Adult Warrant Officers of the Sea Cadet Corps, Army Cadet Force, Air Training Corps or Combined Cadet Force.

Application of other Parts

123

(1) Parts 2 (codes) and 3 (deduction and repayment of tax) do not apply to reserve pay.

(2) The rest of these Regulations apply as if the Inland Revenue had issued the basic rate code in respect of reserve pay.

Deduction of tax

124

(1) On making any payment of reserve pay to a reservist during a tax year, the Ministry must deduct income tax at the basic rate in force when the payment is made.

(2) But the Ministry must not deduct income tax if—

(a) it has received notice from the Inland Revenue of a determination for that tax year under this Chapter that tax is not to be deducted from reserve pay, and

(b) it has not received notice of any amendment of that determination.

(3) This regulation applies even if an objection or appeal has been made under this Chapter.

Determination by Inland Revenue

125

(1) The Inland Revenue may make a determination that tax is not to be deducted from reserve pay if the Inland Revenue are satisfied that the reservist will not be liable to income tax on the full amount of the reserve pay in a tax year.

(2) For the purpose of making a determination, it must be assumed—

(a) that any reliefs from income tax to which the reservist is entitled are allowable primarily against the reservist’s PAYE income from other sources, and

(b) unless the reservist objects, that the balance (if any) of such reliefs is next allowable against the reservist’s income other than PAYE income.

(3) The Inland Revenue may make a determination before, or at any time during, the tax year.

(4) On making a determination the Inland Revenue must notify the reservist and the Ministry.

Objection against deduction of tax

126

(1) A reservist who objects to tax being deducted in accordance with regulation 124 (deduction at basic rate) must state the grounds of objection.

(2) On receiving the notice of objection, the Inland Revenue must make a determination whether income tax at the basic rate is to be deducted from the reserve pay.

(3) Regulation 125(2) (assumptions) applies for the purpose of making the determination.

(4) The Inland Revenue must notify the reservist of the determination.

(5) The Inland Revenue may amend the determination by agreement with the reservist.

(6) If the Inland Revenue and the reservist do not reach agreement, the reservist may appeal against the determination by giving notice to the Inland Revenue.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeal to Commissioners

127

(1) On an appeal that is notified to the tribunal, the tribunal must determine whether income tax at the basic rate is to be deducted from the reserve pay.

(2) Regulation 125(2) (assumptions) applies for the purpose of making the determination.

(3) If, on appeal, the tribunal determines that tax is not to be deducted from the reserve pay, the Inland Revenue must give notice of the determination to the Ministry.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amended determinations

128

(1) This regulation applies if a determination by the Inland Revenue or the tribunal under regulation 125, 126 or 127 is found to be inappropriate because the actual circumstances are different from the circumstances by reference to which it was made.

(2) The Inland Revenue must amend the determination.

(3) The Inland Revenue must give notice of the amended determination to the reservist and the Ministry.

(4) Regulations 126 and 127 apply in relation to an amended determination as they apply in relation to a determination under regulation 126(2).

Certificate of tax deducted

129

(1) On making any payment of reserve pay from which tax is deducted, the Ministry may, and if the reservist so requires must, give the reservist a certificate showing the following particulars.

(2) The particulars are—

(a) the reservist’s name,

(b) the reservist’s national insurance number, if known,

(d) the amount of the payment, and

(e) the amount of tax deducted.

Repayment to reservist during tax year

130

(1) The Ministry must not repay tax in respect of reserve pay to a reservist.

(2) If a reservist applies for a repayment of tax deducted from reserve pay, the Inland Revenue may make such repayment at any time during the tax year as may be appropriate.

(3) In deciding what is appropriate the Inland Revenue must have regard to—

(a) the reserve pay of the reservist for the period from the beginning of the tax year up to and including the date of the application,

(b) the amount of tax deducted from the reserve pay as evidenced by certificates of pay and tax supplied under regulation 129,

(d) the reservist’s other PAYE income for the tax year and, unless the reservist objects, the reservist’s income for the tax year from all other sources, and liability to tax on that income, as estimated by the Inland Revenue.

Particulars that Ministry must record

131

(1) The Ministry must record, in a deductions working sheet, the following particulars about every payment of reserve pay made to a reservist.

(2) The particulars are—

(a) the reservist’s name,

(b) the reservist’s national insurance number, if known,

(d) the date of the payment,

(e) the amount of the payment, and

(f) the amount of tax (if any) deducted on making the payment.

End of year certificate

132

(1) The Ministry must give an end of year certificate to a reservist in respect of whom the Ministry was required to prepare or maintain a deductions working sheet.

(2) The certificate must be given before 1st June following the end of the tax year to which it relates.

(3) The certificate must show—

(a) the tax year to which it relates,

(b) the reservist’s name,

(d) the total amount of reserve pay paid by the Ministry to the reservist during the tax year,

(e) the total tax deducted from the reserve pay,

(f) the force in which the reservist was serving, and

(g) the reservist’s service number.

Other PAYE income of reservist

133

Nothing in this Chapter affects the application of these Regulations to any other PAYE income of a reservist.

CHAPTER 3 — HOLIDAY PAY FUNDS

Interpretation of Chapter 3

134

In this Chapter—

“fund” means a person who pays holiday pay—to an individual who is not employed by the person, orin respect of such an individual who has died;

“holiday pay” means—any payment received by an individual in exchange for a voucher, stamp or similar document purchased by a person who employs (or employed) that individual for any holiday period, orif such an individual has died, any payment received by a person claiming in respect of that individual’s right to such a payment;

“recipient” means a person who is paid holiday pay.

Application of other Parts

135

(1) Parts 2 (codes) and 3 (deduction and repayment of tax) do not apply to holiday pay.

(2) The rest of these Regulations apply as if the Inland Revenue had issued the basic rate code in respect of holiday pay.

Deduction of tax

136

On making any payment of holiday pay to a recipient, a fund must deduct income tax at the basic rate in force at the time the payment is made.

Certificate of tax deducted

137

(1) On making any payment of holiday pay, a fund must give the recipient a certificate showing the following particulars.

(2) The particulars are—

(a) the recipient’s name,

(b) the recipient’s national insurance number, if known,

(d) the date of the payment,

(e) the amount of the payment, and

(f) the amount of tax deducted on making the payment.

Repayment to recipient during tax year

138

(1) A fund must not repay tax deducted from a payment of holiday pay to a recipient.

(2) If a recipient applies for a repayment of tax deducted from holiday pay, the Inland Revenue may make such repayment at any time during the tax year as may be appropriate.

(3) In deciding what is appropriate the Inland Revenue must have regard to—

(a) the holiday pay of the recipient for the period from the beginning of the tax year up to and including the date of the application,

(b) the amount of tax deducted from the holiday pay as evidenced by certificates supplied under regulation 137,

(d) the recipient’s other PAYE income for the tax year and, unless the recipient objects, the recipient’s income for the tax year from all other sources, and liability to tax on that income, as estimated by the Inland Revenue.

Particulars that fund must record

139

(1) A fund must record, in a deductions working sheet, the following particulars about every payment of holiday pay made to a recipient.

(2) The particulars are—

(a) the recipient’s name,

(b) the recipient’s national insurance number, if known,

(d) the date of the payment,

(e) the amount of the payment, and

(f) the amount of tax (if any) deducted on making the payment.

Other PAYE income of recipient

140

Nothing in this Chapter affects the application of these Regulations to any other PAYE income of a recipient.

CHAPTER 4 — DIRECT COLLECTION AND SPECIAL ARRANGEMENTS

Direct collection and special arrangements

141

(1) In any case in which HMRC are of the opinion that deduction of tax by reference to the tax tables is impracticable, the direct collection procedure in regulation 142 applies to any PAYE income, unless HMRC makes special arrangements for the collection of tax in respect of that PAYE income.

(2) A special arrangement does not apply to PAYE income of an employer’s employees if—

(a) the arrangement has not been agreed with the employer, and

(b) the employer does not proceed in accordance with the arrangement.

(3) A special arrangement must be—

(a) in writing, and

(b) signed and dated by the employer and HMRC.

(4) A special arrangement must specify—

(a) the date by which the return under paragraph (8) must be delivered, which must be no later than 31st May following the end of each tax year to which the special arrangement relates, and

(b) the due date for the payment of tax under paragraph (5).

(5) The employer must pay to HMRC by the due date the tax payable in relation to the preceding tax year in respect of the PAYE income to which a special arrangement applies.

(6) PAYE income to which a special arrangement applies is not to be included—

(a) in a return by the employer under regulation 67B, 67D, 67E, 73, 74 or 75 (returns of relevant payments and tax deducted), nor

(b) in particulars provided by the employer under regulation 85 (annual return of other earnings (Form P11D)).

(7) Following the end of the tax year, the employer must deliver to HMRC the information specified in Schedule A1 (real time returns) in respect of the PAYE income to which a special arrangement applied for that tax year.

(8) The information must be included in a return which must be delivered by the date specified in the special arrangement.

(9) The return must be made using an approved method of electronic communications.

(10) In paragraph (3) “in writing” includes electronic communications and “signed” includes electronic signatures.

(11) In paragraphs (4) and (5) “the due date” means the date specified in the special arrangement which must be no later than 31st May following the end of each tax year to which the special arrangement relates.

Direct collection: issue of deductions working sheet

142

(1) On receiving a relevant payment—

(a) an employee (E) must proceed in accordance with paragraph (3) or paragraph (4), as the case may be, and

(b) regulations 143 to 147A (direct collection) apply to E,

unless E objects to the application of the direct collection procedure.

(2) E may, within 30 days beginning with the date of receipt of written notification from HMRC that the direct collection procedure applies, object by written notice to HMRC to that procedure.

(3) E must deliver the information specified in Schedule A1 as if E were a Real Time Information employer for the purposes of regulations 67B (real time information returns of information about relevant payments), 67E (returns under regulations 67B and 67D: amendments), 67EA (failure to make a return under regulation 67B or 67D) and 67F (additional information about payments) and references to “an employer making a relevant payment” are to be read as if they were references to “the employee receiving a relevant payment”.

(4) But if E—

(a) is an individual who is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications, or

(b) has been given a direction under paragraph (5),

E may instead proceed as if E were a Real Time Information employer to whom regulations 67D (exceptions to regulation 67B), 67E (returns under regulations 67B and 67D: amendments), 67EA (failure to make a return under regulation 67B or 67D) and 67F (additional information about payments) apply with the modification referred to in paragraph (3).

(5) Where the Commissioners for Her Majesty’s Revenue are satisfied that—

(a) it is not reasonably practicable for E to make a return using an approved form of electronic communication, and

(b) it is E who delivers the return (and not some other person on E’s behalf),

they may make a direction specifying that E is not required to make a return using an approved method of electronic communication.

Direct collection: employee to keep records

143

(1) Whenever the employee receives any relevant payment during the tax year, the employee must record in a deductions working sheet—

(a) the amount of the payment,

(b) the date on which it was received, and

(2) In addition, the employee must record in that deductions working sheet in relation to the last date in a tax quarter on which the employee receives a relevant payment—

(a) the total free pay to date or, as the case may be, the total additional pay to date in relation to that date according to the employee’s code, and

(b) the corresponding total tax to date.

(3) If the employee does not receive any relevant payments in a tax quarter, the last day of the quarter must be used for the purposes of paragraph (2).

(4) If the employee receives relevant payments in more than one capacity, no account is to be taken for the purposes of this regulation and regulations 144 to 147 of the relevant payments received by the employee in any capacity other than that mentioned in that deductions working sheet.

(5) In this regulation ..., “total payments to date” means, in relation to any date, the sum of all relevant payments received by the employee from the beginning of the tax year up to and including that date, irrespective of the person or persons from whom it was received.

Direct collection: payment

144

(1) In this regulation—

“the current total tax” means the amount required to be recorded at paragraph 17 of Schedule A1 (real time returns) in the most recent return which the employee is required to make in the tax year, or where the employee is required to make a return under regulation 67EA(3) (failure to make a return under regulation 67B), the amount required to be recorded at paragraph 17 of Schedule A1 for the tax year to which that return relates;

“the previous total tax” means the total tax to date (if any) required to be recorded for the previous tax quarter in the tax year.

(2) If, in relation to any tax quarter, the current total tax exceeds the previous total tax, the employee must pay the excess to the Inland Revenue, within 14 days after the end of the tax quarter.

(3) But if, in relation to any tax quarter, the previous total tax exceeds the current total tax, the employee may recover the excess—

(a) by deducting it from the amount payable under paragraph (2) for a later quarter in the tax year, or

(b) from the Board of Inland Revenue.

(4) ... The amount payable under paragraph (2) is not to exceed the overriding limit in relation to the relevant payments which the employee has received in that tax quarter.

(5) Any amount which is not payable because of the application of paragraph (4) must be added to the current total tax for the purpose of the calculation in paragraph (2) or (3) for the next tax quarter (if any) of that tax year.

Direct collection: return when relevant payments cease

145

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Direct collection: end of year return

146

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Direct collection: failure to pay

147

(1) This regulation applies if, within 14 days after the end of any tax quarter—

(a) the employee has not paid any tax for that quarter, and the Inland Revenue are unaware of the amount, if any, which the employee is liable to pay for that quarter, or

(b) the employee has paid an amount of tax for that quarter, but the Inland Revenue are not satisfied that it is the full amount which the employee is liable to pay for that quarter.

(2) The Inland Revenue may give notice to the employee requiring the employee, within 14 days of the issue of the notice, to deliver a return showing the amount of tax which the employee is liable to pay under regulation 144(2) in respect of the tax quarter in question.

(3) If such a notice is given, regulations 77, 84 and 218(5) and (6) (which relate to the certification and recovery of tax unpaid by an employer) apply with the necessary modifications for the purposes of ascertaining, certifying and recovering the tax payable by the employee as if it were tax which the employee was liable to deduct from relevant payments paid by the employee.

CHAPTER 1 — JOBSEEKER'S ALLOWANCE: NORMAL CASES

Interpretation of Chapters 1 and 2

148

In Chapters 1 and 2—

“award” means an award of a jobseeker’s allowance;

“claim” means a claim for a jobseeker’s allowance;

“claimant” means a person who has made a claim, or who is treated for the purposes of the JSA Regulations as having made a claim;

“Chapter 2 claimant” means—a claimant who is entitled to a jobseeker’s allowance by virtue of regulation 17 of the JSA Regulations (laid off and short time workers); or a claimant who is a share fisherman—where the JSA Regulations apply, as defined in regulation 156 of those Regulations; andwhere the Jobseeker’s Allowance Regulations 2013 or Jobseeker’s Allowance Regulations (Northern Ireland) 2016 apply, as defined in regulation 67 of those Regulations;

“Department” means the Department for Work and Pensions or, in Northern Ireland, the Department for Social Development;

“JSA Regulations” means the Jobseeker’s Allowance Regulations 1996[^f00067] or, in Northern Ireland, the Jobseeker’s Allowance Regulations (Northern Ireland) 1996[^f00068];

“jobseeker’s allowance” means benefit payable under—the Jobseekers Act 1995[^f00069], orin Northern Ireland, the Jobseekers (Northern Ireland) Order 1995[^f00070];

“taxable jobseeker’s allowance” means any amount of jobseeker’s allowance which is chargeable to income tax under Chapter 2 of Part 10 of ITEPA (tax on social security income).

Scope of Chapter 1

149

This Chapter applies to claimants who are not Chapter 2 claimants.

Application of other regulations

150

(1) The following regulations apply to payments of taxable jobseeker’s allowance made to a claimant with the modifications mentioned in paragraphs (2) and (3)—

regulation 2	interpretation
regulation 14	matters relevant to determination of code
regulation 15	flat rate codes
regulation 16	continued application of employee’s code
regulation 17	notice to employee of code
regulation 18	objections and appeals against employee’s code
regulation 19	amendment of code
regulation 20	notice to employer of amended code
regulation 21	deduction and repayment of tax by reference to employee’s code
regulation 97	retention by employer of PAYE records
regulation 98	multiple PAYE schemes
regulation 102	succession to a business etc
regulation 185	Adjusting total net tax deducted for purposes of sections 59A(1), 59B(1) and 59BA(2) TMA
regulation 188	assessments other than self-assessments
regulation 211	how information must or may be delivered by employers
regulation 214	how information must be provided by employees
regulation 216	service by post.

(2) In the application of those regulations, the expressions listed in column 1 of Table 5 have the meanings shown in column 2 of the table.

1. Expression	2. Meaning for purposes of this Chapter
employee	claimant
employer	Department
employment	award
relevant payments	taxable jobseeker’s allowance.

(3) In the application of regulations 20 and 21, any reference to the deduction or repayment of tax must be read as a reference to the tax calculation which the Department is required to make at the end of the tax year or on the cessation of an award (by virtue of regulations 157(2)(a) and 158(2) respectively).

Obtaining the claimant’s Form P45

151

(1) A claimant who has Parts 2 and 3 of Form P45 must deliver them to the Department on making a claim for a jobseeker’s allowance which includes taxable jobseeker’s allowance.

(2) If, on making a claim, the claimant declares that the claimant’s last employer did not provide Parts 2 and 3 of Form P45, the Department may require the employer to deliver them to a specified office of the Department.

Deductions working sheet for claimants awarded taxable jobseeker’s allowance

152

(1) The Department must prepare a deductions working sheet in respect of each claimant whose award includes taxable jobseeker’s allowance.

(2) If the Department obtains Parts 2 and 3 of Form P45 relating to the claimant, it must immediately prepare the deductions working sheet using the information shown in Parts 2 and 3 of Form P45 in accordance with regulation 153.

(3) If the Department does not obtain Parts 2 and 3 of Form P45 relating to the claimant, it must prepare the deductions working sheet in accordance with regulation 154.

Form P45: deductions working sheet and return

153

(1) If Parts 2 and 3 of Form P45 relate to the current tax year, the Department must record in the deductions working sheet the total payments to date shown in Parts 2 and 3 of Form P45.

(2) If Parts 2 and 3 of Form P45 relate to the current tax year and show that the cumulative basis has been used, the Department must also—

(a) record the following information from Parts 2 and 3 of Form P45 in the deductions working sheet, or

(b) keep such records as enable production of the information.

(3) If the code shown in Parts 2 and 3 of Form P45 is a K code, the information is—

(a) the total additional pay to date,

(b) the total taxable payments to date, and

(c) the lower of the total tax to date as at the week or month shown in Parts 2 and 3 of Form P45 or the total net tax deducted shown in them.

(4) In any other case the information is—

(a) the total free pay to date,

(b) the total taxable payments to date, and

(5) Paragraph (6) applies if—

(a) the claim is made by 24th May in a tax year, and

(b) Parts 2 and 3 of Form P45 show that the last relevant payment was made in the preceding tax year.

(6) The Department must complete the deductions working sheet but without recording the total payments to date or total net tax deducted (if any) shown in Parts 2 and 3 of Form P45.

(7) In cases falling within paragraphs (1) and (5), the code shown in Parts 2 and 3 of Form P45 must be treated as the claimant’s code for the purposes of these Regulations.

(8) If, in a case not falling within paragraph (5), Parts 2 and 3 of Form P45 show that the last relevant payment was made in a tax year preceding that in which the claim was made, the Department—

(a) must complete the deductions working sheet but without recording the total payments to date or total net tax deducted (if any) shown in Parts 2 and 3 of Form P45, and

(b) must record the emergency code as the claimant’s code.

(9) The Department must supply the information recorded under this regulation to the Inland Revenue together with such further information as may be required for the purposes of these Regulations.

No Form P45: deductions working sheet and return

154

(1) In a case falling within regulation 152(3) (no Form P45), the Department must—

(a) prepare the deductions working sheet within 14 days of the award of a taxable jobseeker’s allowance, and

(b) record the emergency code as the claimant’s code.

(2) The Department must also deliver a return to the Inland Revenue, giving—

(a) the claimant’s name,

(b) the claimant’s national insurance number,

(d) the date on which the claim was made, and

(e) the reference number of the benefit office submitting the return.

(3) But the return need not be delivered if the claimant certifies that the claimant—

(a) is undergoing a course of full-time education and has not had regular employment since the previous 6th April, or

(b) has not had regular employment since finishing full-time education.

Claimant’s code etc to be used for calculations

155

(1) This regulation applies if, in respect of a claimant, the Department receives notification from the Inland Revenue of—

(a) a code or amended code,

(b) total payments to date, or

(2) The Department must record that notification in substitution for any previous record and use it for the purpose of all calculations required under this Chapter.

Recording the amount of taxable jobseeker’s allowance

156

Whenever a payment of jobseeker’s allowance is made, the Department must record the taxable jobseeker’s allowance included in the payment.

Obligations at end of tax year

157

(1) This regulation applies in respect of each award which includes taxable jobseeker’s allowance and which continues beyond the end of a tax year.

(2) Before 1st June following the end of the tax year, the Department must—

(a) make a tax calculation in accordance with regulation 161 if the claimant’s code is used on the cumulative basis;

(b) subject to paragraph (3), issue a certificate to the claimant; and

(3) The Department need not issue the certificate if—

(a) no taxable jobseeker’s allowance has been paid, and

(b) a tax calculation in accordance with regulation 161 is not required.

(4) The certificate must show—

(a) the tax year to which it relates,

(b) the total jobseeker’s allowance for the tax year excluding any amounts previously notified under regulation 159(2) or 160(2),

(d) the claimant’s code,

(e) the claimant’s national insurance number,

(f) the claimant’s name,

(g) the claimant’s address, if known,

(h) any previous relevant payments and any tax deducted from those relevant payments which the Department was required to take into account under regulation 161,

(i) any total payments to date recorded by the Department in accordance with regulation 153(1) plus the total taxable jobseeker’s allowance for the tax year, and the corresponding total net tax deducted, and

(j) the amount of tax refunded by the Department.

(5) The return must show—

(a) the particulars specified in paragraph (4), and

(b) if a calculation is required under regulation 161, any amount of tax outstanding.

When an award ceases

158

(1) For the purposes of these Regulations an award ceases when entitlement to a jobseeker’s allowance ceases.

(2) When an award of a taxable jobseeker’s allowance ceases the Department must make a tax calculation in accordance with regulation 161 if the claimant’s code is used on the cumulative basis.

(3) The relevant date for the purposes of that calculation is the date on which the award ceases.

(4) The date on which the award ceases is the last day for which benefit was paid and was not recoverable, except that if the last day is 4th or 5th April the date is the preceding 3rd April.

(5) But the Department need not amend a tax calculation solely because the date used for the purposes of the calculation is subsequently shown to be incorrect.

Cessation of award: Form P45U

159

(1) When an award of a taxable jobseeker’s allowance ceases the Department must immediately complete Form P45U.

(2) The Department must then—

(a) send Part 1 of Form P45U to the Inland Revenue, and

(b) provide Part 1A of Form P45U and Parts 2 and 3 of Form P45 to the claimant.

(3) The information listed in column 1 of Table 6 must, subject to the conditions set out in column 2, be provided in Parts 1 and 1A of Form P45U and Parts 2 and 3 of Form P45 as indicated in columns 3 to 5.

1.	2.	3.	4.	5.
Information to be provided	Conditions	FormP45U	FormP45U	Form P45
		Part 1	Part 1A	Parts 2 & 3
1the tax reference as shown in the deductions working sheet		yes	yes	yes
2the claimant’s national insurance number		yes	yes	yes
3the claimant’s name		yes	yes	yes
4the date on which the award ceased		yes	yes	yes
5the claimant’s code or, if more than one, the latest code for the tax year during which the award ceased		yes	yes	yes
6whether the claimant’s code is used on the cumulative basis		yes	yes	yes
7the tax week or month in which the award ceased	if the claimant’s code is used on the cumulative basis	yes	yes	yes
8the total payments to date (including taxable jobseeker’s allowance) at the date the award ceased, and the corresponding total net tax deducted	if the claimant’s code is used on the cumulative basis	yes	yes	yes
9the taxable jobseeker’s allowance paid during the tax year by virtue of the award in question	if the claimant’s code is used on the cumulative basis, and if different from the information supplied under item 8	yes	yes	no
10the taxable jobseeker’s allowance paid during the tax year by virtue of the award in question	if the claimant’s code is not used on the cumulative basis	yes	yes	no
11any amount of tax outstanding	if the claimant’s code is used on the cumulative basis	yes	no	no
12whether the claimant was self-employed immediately before the claim was made		yes	no	no
13whether the claimant is receiving a pension by reason of a former employment		yes	no	no
14the claimant’s address	if known	yes	no	no
15the address of the benefit officer		yes	yes	no
16the date the form is completed		yes	yes	no

(4) The Department must also give notice to the claimant of—

(a) the total jobseeker’s allowance for the tax year excluding any sums previously notified under this regulation or regulation 160, 171 or 172, and

(b) the taxable jobseeker’s allowance included in that total.

(5) Expressions used in Parts 2 and 3 of Form P45 have the following meanings—

(a) “employee” means “claimant”,

(b) “leaving date” means “date the award ceased”, and

(6) Regulation 163 (death of claimant) modifies the requirements of this regulation if an award of taxable jobseeker’s allowance has ceased on the death of the claimant.

Notification of taxable jobseeker’s allowance adjustment

160

(1) Paragraph (2) applies if—

(a) after a certificate under regulation 157(2)(b) has been issued (or would have been issued but for regulation 157(3)), or

(b) after a notice has been issued under regulation 159(4) or this regulation,

further taxable jobseeker’s allowance is paid to, or taxable jobseeker’s allowance overpaid is recovered from, the claimant.

(2) The Department must—

(a) give notice to the claimant of the revised figure of total jobseeker’s allowance and the taxable jobseeker’s allowance included in that revised figure in accordance with the relevant regulation, and

(b) notify the Inland Revenue of the sums paid or refunded.

Tax calculation

161

(1) This regulation applies, subject to regulation 162, if the Department is required by regulation 157 or 158 to make a tax calculation.

(2) The Department must calculate in respect of the claimant as at the relevant date—

(a) the total payments to date, and

(b) the claimant’s total tax.

(3) If the recorded tax exceeds the claimant’s total tax, the Department must repay the excess to the claimant.

(4) But if the recorded tax is less than the claimant’s total tax—

(a) the difference is tax outstanding for the purposes of regulation 157(5)(b) or item 11 of Table 6 in regulation 159(3), and

(b) the Department must treat the claimant’s code as issued by the Inland Revenue on the non-cumulative basis from the relevant date.

(5) In this regulation—

“claimant’s total tax” means the lesser of—50% of the claimant’s total payments to date, andthe tax due in accordance with the appropriate tax tables in respect of the claimant’s total taxable payments to date at the relevant date;

“recorded tax” means the total tax to date or (as the case may be) the total net tax deducted which was recorded in accordance with regulation 153(3) or (4) when the claim was made;

“relevant date” means—the end of the tax year, if the calculation is required by regulation 157;the date used for the purposes of the calculation, if the calculation is required by regulation 158;

“total payments to date” means any payments to date recorded by the Department in accordance with regulation 153(1), plus the total taxable jobseeker’s allowance.

No tax calculation required in certain cases

162

(1) A tax calculation under regulation 161 is not required in any of the following cases—

(a) if the claimant does not give the Department Parts 2 and 3 of Form P45, and does not certify in accordance with regulation 154(3) (students etc);

(b) if the claimant gives the Department Parts 2 and 3 of Form P45, but they do not relate to the claimant’s last employment or award before the present award, whichever is later;

(d) if it appears to the Department on the occasion of a claim that a previous award should have been treated as having ceased in accordance with regulation 158 (when an award ceases); or

(e) if the claimant’s code is a nil tax code, basic rate code or higher rate code.

(2) Those cases are treated as if the Inland Revenue had made a direction that the claimant’s code must be used on the non-cumulative basis.

(3) Those cases are subject to a notification from the Inland Revenue under regulation 155 that revised particulars are to be substituted and used.

Death of claimant

163

(1) On being informed of the death of a claimant whose award included taxable jobseeker’s allowance, the Department must send the Inland Revenue the completed Form P45U indicating in Part 1 that the claimant has died.

(2) If the Department knows the name and address of the claimant’s personal representative, the Department must send the notice referred to in regulation 159(4) to the personal representative.

(3) But if the Department has not been notified of the name and address of the claimant’s personal representative within 30 days of the claimant’s death, the Department is not required—

(a) to make a tax calculation under regulation 161, nor

(b) to issue the notice under regulation 159(4).

Finance

164

(1) The Board of Inland Revenue must advance monies to the National Insurance Funds of Great Britain and Northern Ireland at intervals to be agreed with the Department for use in making repayments of income tax under these Regulations.

(2) The Department must provide the Board with a quarterly statement of receipts and payments.

CHAPTER 2 — JOBSEEKER'S ALLOWANCE: SPECIAL CASES

Scope of Chapter 2

165

(1) This Chapter applies only to Chapter 2 claimants (as defined by regulation 148).

(2) Except for regulation 148 (interpretation), Chapter 1 does not apply to Chapter 2 claimants.

Jobseeker’s allowance paid directly to claimant

166

(1) This regulation applies if the Department makes a payment of taxable jobseeker’s allowance directly to a Chapter 2 claimant.

(2) The Department must—

(a) record the amount, and

(b) pay the full sum without any deduction or repayment of income tax.

Jobseeker’s allowance paid by employer

167

(1) If—

(a) a jobseeker’s allowance is paid to a Chapter 2 claimant by the claimant’s employer on behalf of the Department, and

(b) the employer calculates the jobseeker’s allowance payable by reference to instructions supplied by the Department,

the employer must also calculate the taxable jobseeker’s allowance in accordance with those instructions.

(2) If—

(a) a jobseeker’s allowance is paid to a Chapter 2 claimant by the claimant’s employer on behalf of the Department, and

(b) paragraph (1)(b) does not apply,

the Department must notify the employer of the amount of jobseeker’s allowance and of taxable jobseeker’s allowance.

(3) If the employer has undertaken to pay a jobseeker’s allowance on behalf of the Department, the Department must pay the full amount to the employer without any deduction on account of income tax.

Regulation 167 cases: application of other regulations

168

(1) Parts 2 to 4 (codes; deduction and repayment of tax; payments, returns and information) apply to the taxable jobseeker’s allowance paid to a Chapter 2 claimant by the employer on behalf of the Department under regulation 167, as if it were a relevant payment from the employment.

(2) But this is subject to paragraph (3), which applies in any case in which it appears to the Inland Revenue that deduction of tax from the taxable jobseeker’s allowance paid by the employer on behalf of the Department by reference to the tax tables is impracticable.

(3) The Inland Revenue may make such other arrangements as are appropriate for the collection of tax in respect of taxable jobseeker’s allowance.

(4) Regulations 170 to 172 (information to be supplied etc) do not apply if—

(a) the Chapter 2 claimant’s employer has been paying the jobseeker’s allowance in accordance with regulation 167, and

(b) the employer provides the information in question.

When a Chapter 2 award ceases

169

For the purposes of this Chapter, an award ceases when entitlement to a jobseeker’s allowance which depends on regulation 17 or 156 of the JSA Regulations ceases.

Information to be supplied at end of tax year

170

(1) This regulation applies in respect of an award of taxable jobseeker’s allowance which continues beyond the end of a tax year.

(2) Before 1st June following the end of the tax year, the Department must give notice to the Inland Revenue and the Chapter 2 claimant of—

(a) the total jobseeker’s allowance, and

(b) the taxable jobseeker’s allowance,

paid in respect of the award during that tax year.

Information to be supplied when an award of taxable jobseeker’s allowance ceases

171

(1) When an award of taxable jobseeker’s allowance ceases, the Department must give notice to the Inland Revenue and, except where the Chapter 2 claimant has died, the claimant, of—

(a) the total jobseeker’s allowance, and

(b) the taxable jobseeker’s allowance,

paid in respect of the award, showing the amounts appropriate to the award for the tax year in which it ceased.

(2) If the Department has been notified of the name and address of a deceased claimant’s personal representative within 30 days of the claimant’s death, the Department must send the notice to the personal representative.

Adjustments of taxable jobseeker’s allowance

172

(1) Paragraph (2) applies if, after the issue of a notice under regulation 170 or 171(1)—

(a) further taxable jobseeker’s allowance is paid to the Chapter 2 claimant, or

(b) taxable jobseeker’s allowance overpaid is recovered from the Chapter 2 claimant.

(2) The Department must—

(a) notify the Chapter 2 claimant of the revised figure of total jobseeker’s allowance and the taxable jobseeker’s allowance included in that revised figure, and

(b) notify the Inland Revenue of any adjustment to the figure of taxable jobseeker’s allowance,

showing the amounts appropriate to each tax year.

CHAPTER 3 — INCAPACITY BENEFIT

Interpretation of Chapter 3

173

In this Chapter—

“award” means an award of incapacity benefit;

“claim” means a claim for incapacity benefit;

“claimant” means a person who has made a claim;

“Department” means the Department for Work and Pensions or, in Northern Ireland, the Department for Social Development;

“incapacity benefit” means short-term incapacity benefit or long-term incapacity benefit payable under—sections 30A(1), 30A(5), 40 or 41 of the Social Security Contributions and Benefits Act 1992[^f00071], orin Northern Ireland, section 30A(1), 30A(5), 40 or 41 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992[^f00072];

“single-income claimant” means a claimant who, for a tax year—is not entitled to receive any relevant payments in addition to the payments of taxable incapacity benefit, oris so entitled but has failed to provide any details relating to those payments when making the claim,and who is not a self-employed earner as defined by section 2 of the Social Security Contributions and Benefits Act 1992 or, in Northern Ireland, section 2 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

“taxable incapacity benefit” means any amount of incapacity benefit which is chargeable to income tax under Chapter 2 of Part 10 of ITEPA (tax on social security income).

Application of other regulations

174

(1) The following regulations apply, subject to this Chapter, to payments of taxable incapacity benefit with the modifications mentioned in paragraphs (2) to (4)—

regulation 2	interpretation
regulation 15	flat rate codes
regulation 16	continued application of employee’s code
regulation 17	notice to employee of code
regulation 18	objections and appeals against employee’s code
regulation 19	amendment of code
regulation 20	notice to employer of amended code
regulation 21	deduction and repayment of tax by reference to employee’s code
regulations 22 to 25	cumulative basis
regulations 26 to 31	non-cumulative basis
regulation 33	nil tax code: no deductions or repayments
regulation 36	cessation of employment: Form P45
regulation 66	deductions working sheets
regulation 67	information to employees about payments and tax deducted
regulation 68	periodic payments to and recoveries from the Revenue
regulation 69	due date and receipts for payments of tax
regulation 70	quarterly tax periods
regulation 72	recovery from employee of tax not deducted by employer
regulation 73	annual return of relevant payments liable to deduction of tax
regulation 74	annual return of relevant payments not liable to deduction of tax
regulation 76	certificate if tax in regulation 73 return is unpaid
regulation 79	certificate after inspection of PAYE records
regulation 84	recovery of tax and interest
regulation 97	retention by employer of PAYE records
regulation 98	multiple PAYE schemes
regulation 102	succession to a business etc
regulation 141	direct collection and special arrangements
regulation 185	adjusting total net tax deducted for purposes of sections 59A(1) and 59B(1) TMA
regulation 188	assessments other than self-assessments
regulation 211	how information must or may be delivered by employers
regulation 216	service by post
regulation 218	certificate that sum due
regulation 219	payment by cheque.

(2) In the application of those regulations, the expressions listed in column 1 of Table 7 have the meanings shown in column 2 of the table.

1. Expression	2. Meaning for purposes of this Chapter
employee	claimant
employer	Department
employment	award
relevant payments	taxable incapacity benefit.

(3) In regulation 15 (flat rate codes)—

(a) omit paragraph (1);

(b) omit paragraph (3)(a); and

(c) the Inland Revenue consider that the code which would otherwise be the claimant’s code would result in too much tax being deducted for the tax year in question.

(4) In regulation 21(1) (deduction and repayment of tax by reference to employee’s code), for “in accordance with these Regulations” substitute “in accordance with Chapter 3 of Part 8”.

Emergency IB code to be used before claimant’s code issued

175

(1) Paragraph (2) applies if the Department makes a payment of taxable incapacity benefit during a tax year to a single-income claimant before a code has been issued by the Inland Revenue for that year in respect of that award.

(2) The Department must—

(a) deduct tax using an emergency IB code on the non-cumulative basis, and

(b) keep records in a deductions working sheet which it must prepare for the purpose.

(3) The use of an emergency IB code under this regulation is treated as the issue of a code for the purposes of regulations 21, 36 and 180.

Return in respect of all claimants to taxable incapacity benefit

176

(1) When the Department first makes a payment of taxable incapacity benefit to a claimant it must immediately deliver a return to the Inland Revenue containing the following information.

(2) The information is—

(a) the claimant’s name,

(b) the claimant’s address,

(d) the claimant’s national insurance number,

(e) the date on which the claimant’s entitlement to taxable incapacity benefit began,

(f) the weekly rate of taxable incapacity benefit being paid to the claimant,

(g) if a code is being used for the payment, that code and whether it is used on the non-cumulative basis,

(h) if the payment was preceded by payment of incapacity benefit which was not taxable, the date that benefit was first paid, and

(i) the claimant’s tax reference, if known.

Further return required in certain cases

177

(1) On making a subsequent payment of taxable incapacity benefit to the claimant, the Department must deliver a further return in accordance with regulation 176 as if that subsequent payment were the first payment, if conditions A and B are met.

(2) Condition A is that the Inland Revenue have previously determined the claimant’s code in relation to the payments of incapacity benefit to be a nil tax code.

(3) Condition B is that the subsequent payment is the first payment to be made at a different rate from the rate subsisting at the time of that determination.

(4) In addition to providing the information listed in regulation 176(2), the Department must indicate in the further return that the weekly rate of taxable incapacity benefit being paid to the claimant represents a revised amount.

Delivery of Form P45 to Department

178

(1) This regulation applies if a single-income claimant—

(a) has Parts 2 and 3 of Form P45, and

(b) has not made, and does not intend to make, a claim for repayment of tax.

(2) The claimant must deliver Parts 2 and 3 of Form P45 when making a claim, and the Department must immediately send them to the Inland Revenue office.

Determination of claimant’s code by Inland Revenue

179

(1) On receiving a return under regulation 176 relating to a single-income claimant, the Inland Revenue must determine the code for the claimant.

(2) The Inland Revenue may determine the code for a claimant who is not a single-income claimant if they consider that it would be impractical to collect tax arising on the claimant’s taxable incapacity benefit by other means.

(3) In determining the code for a claimant under this regulation, regulation 14(1) (matters to which Revenue must have regard in determining an employee’s code) does not apply.

(4) If the Inland Revenue are satisfied the claimant is entitled, for the tax year for which the code is determined, to any of the following reliefs from income tax, they must have regard to that relief in determining the code for the claimant under this regulation.

(5) The reliefs are—

(a) personal allowance (section 257(1) of ICTA[^f00073]),

(b) married couple’s allowance (section 257A of ICTA[^f00074]), and

(6) If the Inland Revenue determine the code for a claimant before the beginning of the tax year for which it is determined, the Inland Revenue—

(a) must have regard to any expected change in the amounts of those reliefs, but

(b) may disregard any of those reliefs if they are not satisfied that the claimant will be entitled to it for the tax year for which it is determined.

Death of claimant

180

(1) On the death of a claimant in respect of whom a code has been issued by the Inland Revenue, the Department must—

(a) complete Form P45 indicating in Part 1 that the claimant has died, and

(b) send it to the Inland Revenue.

(2) The Department must comply with paragraph (1)—

(a) on the day on which it learns of the claimant’s death, or

(b) if that is not practicable, without unreasonable delay.

(3) Paragraph (4) applies if the Department makes any payment of taxable incapacity benefit after the date of the claimant’s death—

(a) before completing Form P45, or

(b) after completing Form P45 but during the tax year in which the claimant died.

(4) The Department must, on making the payment, deduct or repay tax as if the deceased claimant were still alive and the award had not ceased at the date of payment.

(5) Regulation 37(2) to (6) (PAYE income paid after employment ceased) applies to any payment of taxable incapacity benefit which—

(a) is made in a tax year following the tax year in which the claimant died, and

(b) is not included in Form P45.

CHAPTER 4 — INCOME SUPPORT

Interpretation of Chapter 4

181

In this Chapter—

“award” means an award of income support;

“claim” means a claim for income support;

“claimant” means a person who has made a claim;

“Department” means the Department for Work and Pensions or, in Northern Ireland, the Department for Social Development;

“income support” means benefit payable under—section 124 of the Social Security Contributions and Benefits Act 1992[^f00076], orin Northern Ireland, section 123 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992[^f00077];

“taxable income support” means any amount of income support which is chargeable to income tax under Chapter 2 of Part 10 of ITEPA (tax on social security income).

Recording the amount of taxable income support

182

Whenever the Department makes a payment of taxable income support it must—

(a) record the amount, and

(b) pay the full sum without any deduction or repayment of income tax.

Information to be supplied when an award of taxable income support ceases

183

(1) This regulation applies when an award of taxable income support ceases.

(2) The Department must give notice to the Inland Revenue and, except where the claimant has died, the claimant of—

(a) the total income support, and

(b) the taxable income support,

paid in respect of the award showing the amounts appropriate to each tax year.

(3) If the Department has been notified of the name and address of a deceased claimant’s personal representative within 30 days of the claimant’s death, the Department must send the notice to the personal representative.

Adjustments of taxable income support

184

(1) Paragraph (2) applies if, after the issue of a notice under regulation 183(2)—

(a) further taxable income support is paid to the claimant, or

(b) taxable income support overpaid is recovered from the claimant.

(2) The Department must—

(a) notify the claimant of the revised figure of total income support and the taxable income support included in that revised figure, and

(b) notify the Inland Revenue of any adjustment to the figure of taxable income support,

showing the amounts appropriate to each tax year.

PART 9 — ASSESSMENT AND SELF-ASSESSMENT

Adjusting total net tax deducted for purposes of sections 59A(1), 59B(1) and 59BA(2) TMA

185

(1) This regulation applies for the purpose of determining—

(a) the excess mentioned in section 59A(1) of TMA[^f00078] (payments on account of income tax: income tax assessed exceeds amount deducted at source), ...

(b) the difference mentioned in section 59B(1) of TMA[^f00079] (payments of income tax and capital gains tax: difference between tax contained in self-assessment and aggregate of payments on account or deducted at source), and

(c) the difference mentioned in section 59BA(2) of TMA (payments of income tax and capital gains tax: difference between tax contained in simple assessment and aggregate of payments on account or deducted at source).

(2) For those purposes, the amount of income tax deducted at source under these Regulations is the total net tax deducted during the relevant tax year (“A”) after making any additions or subtractions required by paragraphs (3) to (5).

(3) Subtract from A any repayments of A which are made before the taxpayer’s return and self-assessment is made under section 8 or 8A of TMA[^f00080] (personal return and trustee’s return).

(4) Add to A any overpayment of tax from a previous tax year, to the extent that it was taken into account in determining the taxpayer’s code for the relevant tax year.

(5) Add to A any tax treated as deducted, other than any direction tax, but—

(a) only if there would be an amount payable by the taxpayer under section 59B(1) of TMA on the assumption that there are no payments on account and no addition to A under this paragraph, and then

(b) only to a maximum of that amount.

(6) In this regulation—

“direction tax” means any amount of tax which is the subject of a direction made under regulation 72(5), regulation 72F , regulation 72GB or regulation 81(4) in relation to the taxpayer in respect of one or more tax periods falling within the relevant tax year;

“relevant tax year” means—in relation to section 59A(1) of TMA, the immediately preceding year referred to in that subsection;in relation to section 59B(1) of TMA, the tax year for which the self-assessment referred to in that subsection is made; in relation to section 59BA(2) of TMA the tax year for which the simple assessment referred to in that subsection is made;

“tax treated as deducted” means any tax which in relation to relevant payments made by an employer to the taxpayer in the relevant tax year—the employer was liable to deduct from payments but failed to do so, orthe employer was liable to account for in accordance with regulation 62(5) (notional payments) but failed to do so;

“the taxpayer” means the person referred to in section 59A(1) of TMA or the person whose self-assessment is referred to in section 59B(1) of TMA or the person whose simple assessment is referred to in section 59BA(2) of TMA (as the case may be).

Recovery: adjustment of employee’s code

186

(1) This regulation applies if, on the assumption mentioned in paragraph (2), the difference for a tax year mentioned in section 59B(1) of TMA (difference between tax contained in a self-assessment and aggregate of payments on account) would be payable by the taxpayer.

(2) The assumption is that, in respect of the tax year, nothing will be deducted at source under these Regulations in a subsequent tax year.

(3) The Inland Revenue must have regard to the difference in determining a taxpayer’s code for a subsequent tax year under regulation 14 (matters relevant to determination of code) if—

(a) it is less than £3,000, and

(b) the return for the tax year is—

(i) delivered by an approved method of electronic communications before 31st December following the end of the tax year, or

(ii) delivered by any other method before 1st November following the end of the tax year.

(4) In a case not falling within paragraph (3)(b)(i), the Inland Revenue may have regard to the difference in determining a taxpayer’s code for a subsequent tax year under regulation 14 if—

(a) it is less than £3,000, and

(b) the return for the tax year is delivered on or after 1st November following the end of the tax year and the code is determined before 31st December.

(5) But the Inland Revenue must not have regard to the difference if the taxpayer objects at the time the return is delivered or subsequently.

Repayment: adjustment of employee’s code

187

(1) This regulation applies if the difference for a tax year mentioned in section 59B(1) of TMA (difference between tax contained in a self-assessment and aggregate of payments on account) is payable to the taxpayer.

(2) The Inland Revenue may have regard to the difference in determining the employee’s code for a subsequent tax year under regulation 14 (matters relevant to determination of code).

(3) But the Inland Revenue must not have regard to the difference if the taxpayer objects at the time the return is delivered or subsequently.

Assessments other than self-assessments

188

(1) In this regulation, “assessment” means an assessment other than one under section 9 of TMA[^f00081] (self-assessment).

(2) The tax payable by the employee is—

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