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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(b) any payments made on behalf of the employee by the employer or related third party and not repaid, including the amounts;

(c) any non-cash voucher provided by the employer or related third party by reason of which the employee is treated by section 87(1) (benefit of non-cash voucher treated as earnings) or 87A(1) (benefit of non-cash voucher treated as earnings: optional remuneration arrangements) of ITEPA as receiving earnings in that tax year, including the amount of those earnings;

(d) any use of a credit-token provided by the employer or related third party by reason of which the employee is treated by section 94(1) (benefit of credit-token treated as earnings) or 94A(1) (benefit of credit-token treated as earnings: optional remuneration arrangements) of ITEPA as receiving earnings in that tax year, including the amount of those earnings;

(e) the due amount in respect of any notional payment where that amount is treated by section 222 of ITEPA²⁶ (payments on account of tax where deduction not possible) as earnings of the employee received in that tax year;

(f) any living accommodation which has been provided for the employee or a member of the employee’s family or household by the employer or related third party, including the amount that is treated as earnings for that tax year by section 102 (benefit of living accommodation treated as earnings) or 103A (accommodation provided pursuant to optional remuneration arrangements: relevant amount) of ITEPA;

(g) any earnings consisting of the amount by which the value of the exemption under subsection (2) of section 287 of ITEPA (limit on exemption of removal expenses and removal benefits) exceeds the limit specified in subsection (1) of that section and having effect in relation to the employee.

(2) Particulars of removal expenses and removal benefits to which section 271 of ITEPA (limited exemption of removal benefits and expenses) applies are required—

(a) only under paragraph (1)(g), and

(b) only to the extent that they exceed the limit in section 287(1) of ITEPA which applies to the change of residence of the employee in question.

(3) In the case of any earnings relating to business entertainment, as defined by section 356(1) of ITEPA, the employer must also inform the Inland Revenue whether the amount of the earnings has been or will be disallowed as a deduction or inclusion ... in any tax computation relating to the trade, business, profession or vocation of the employer.

(4) “Related third party” means a person making payments or providing benefits to an employee, if the making or provision of the payments or benefits by that person has been arranged, guaranteed or in any way facilitated by the employer.

Information employer must also provide for benefits code employees

87

(1) Particulars of the following information must also be provided in the case of each employee whose employment is subject to the benefits code—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) any sums put by the employer or related third party at the disposal of the employee by reason of the employment and paid away by the employee;

(c) any benefits provided by the employer or related third party for the employee such as give rise to any amount treated by Chapters 6 to 10 of Part 3, and section 223, of ITEPA²⁷ (cars and vans, loans, shares, other benefits and payments on account of director’s tax) as earnings of the employee received in that tax year, including the amount of those earnings.

(d) any mileage allowance payments which are not approved mileage allowance payments;

(e) any passenger payments which are not approved passenger payments.

(2) Particulars are not required under paragraph (1) of removal expenses and removal benefits to which section 271 of ITEPA (limited exemption of removal benefits and expenses) applies (as to which see regulation 86(2)).

(3) In the case of any earnings relating to business entertainment, as defined by section 577 of ICTA, the employer must also inform the Inland Revenue whether the amount of the earnings has been or will be disallowed as a deduction or inclusion as mentioned in section 577(1)(a) of that Act in any tax computation relating to the trade, business, profession or vocation of the employer.

(4) In this regulation—

“approved mileage allowance payments” are mileage allowance payments that are approved in accordance with section 229(3) of ITEPA;

“approved passenger payments” are passenger payments that are approved in accordance with section 233(4) of ITEPA;

“mileage allowance payments” have the meaning given by section 229(2) of ITEPA;

“passenger payments” have the meaning given by section 233(3) of ITEPA.

“related third party” has the meaning given in regulation 86(4).

(5) Regulation 85(3) (meaning of employment “subject to benefits code”) applies for the purposes of this regulation.

Annual return of other earnings: amounts

88

(1) Paragraph (2) applies if an employer is required by regulations 85 to 87 to provide an amount which is or is treated as earnings.

(2) The employer must make all deductions and other adjustments which the employer is able to show, by reference to information in the employer’s possession or otherwise available to the employer, are authorised or required by Part 3 of ITEPA (earnings and benefits etc treated as earnings).

Annual return of other earnings: exclusion for notional payments

89

The employer is not required to provide particulars in the return under regulation 85 of any notional payment which is a relevant payment made by the employer to the employee (as particulars of it may be required under regulation 67B (real time returns of information about relevant payments) or 74 (annual returns of relevant payments)).

Quarterly return if a car becomes available or unavailable (Form P46 (Car))

90

(1) This regulation applies if—

(a) section 120 (benefit of car treated as earnings) or 120A (benefit of a car treated as earnings: optional remuneration arrangements) of ITEPA treat the benefit of a car as giving rise to an amount as earnings of an employee received in a tax year, and

(b) one or more of the following occurs in a tax quarter—

(i) the car becomes available;

(ii) the car becomes unavailable;

(iii) the car is available and the employee’s employment becomes subject to the benefits code (as defined by regulation 85(3)).

(1A) This regulation does not apply if—

(a) the reason a car becomes available or unavailable is that one is replaced with another; or

(b) Chapter 3A of these Regulations applies.

(2) The employer must provide the HMRC with the following information in respect of the employee not later than 28 days after the end of the tax quarter.

(3) The information is—

(a) the employee’s name,

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

(d) any provisional sum as calculated pursuant to section 121A(1) of ITEPA

(e) any capital sum contributed by the employee to expenditure on the provision of the car or on any qualifying accessory which is taken into account in so determining the interim sum in respect of the car,

(f) any amount which, as a condition of the car being available for the employee’s private use, the employee is required to pay in the tax year concerned for that use (whether by way of deduction from relevant payments or otherwise),

(g) whether any fuel is provided for private use.

(4) In this regulation—

“available” and “unavailable” are to be read in accordance with sections 116(1) and 143(2) of ITEPA (meaning of when car is available and unavailable to employee);

“qualifying accessory” has the meaning given in section 125 of ITEPA (meaning of accessory etc).

Termination awards: information to be provided

91

(1) Before 7th July following the end of the tax year, an employer must, in respect of each employee who received a termination award, provide the Inland Revenue with the information specified in paragraph (3) relating to that award.

(2) “Termination award” means an award consisting of payments combined with other benefits, or consisting solely of other benefits—

(a) which were awarded in that tax year in connection with the termination of the employee’s employment with the employer, or any change in the duties of or earnings from that employment,

(b) which when provided (whether in that or a subsequent tax year) would constitute payments and other benefits received to which Chapter 3 of Part 6 of ITEPA applies (payments and benefits on termination of employment etc), and

(c) the total amount of which is estimated by the employer to exceed £30,000, when aggregated with other payments and other benefits provided or to be provided (whether in that or a subsequent tax year) in respect of the same person as mentioned in section 404(1) of ITEPA (aggregation of payments in respect of other related employments).

(3) The information to be provided is—

(a) the total amount of the payments and other benefits awarded;

(b) the total amount of the payments made in that tax year in connection with the award;

(c) details of the non-cash benefits provided in that tax year in connection with the award, other than benefits previously contained in a return for that tax year under regulation 85, and the total amount of their amounts calculated in accordance with section 415(2) of ITEPA (valuation of benefits);

(d) the estimated total number of the tax years in which payments and non-cash benefits are to be provided in connection with the award and, if the duration of any of those payments and non-cash benefits is capable of being reduced in certain circumstances, details of those circumstances;

(e) the estimated total amount of the payments to be made in subsequent tax years in connection with the award;

(f) a description of each of the other benefits to be provided in subsequent tax years in connection with the award, and the terms of their provision.

(4) In calculating the cash equivalents of non-cash benefits for the purposes of this regulation, the employer must make all deductions and other adjustments which the employer is able to show, by reference to information in the employer’s possession or otherwise available to the employer, are authorised or required by any of the provisions of the benefits code as applied by section 415 of ITEPA.

(5) In calculating the total amount of payments and other benefits for the purposes of paragraphs (2)(c) and (3)(a), the employer—

(a) must have regard to the provisions of Chapter 3 of Part 6 of ITEPA,

(b) must take into account the matters referred to in paragraph (3)(d),(e) and (f), and

(c) in valuing the amount of non-cash benefits for future tax years in connection with the award, must assume that the provisions of ITEPA relating to those benefits will remain unchanged with respect to those years.

(6) Information required to be provided by an employer in accordance with paragraphs (1) and (3) may be provided after the termination award is made but before the end of the tax year in which it is made.

(7) If information is provided in accordance with paragraph (6), paragraph (3)(b) and (c) have effect, so far as concerns the providing of information relating to the tax year, as if they required the amounts and benefits there specified to be estimated by the employer as accurately as possible.

(8) This regulation is subject to regulation 93 (return if more than one employer).

(9) In this regulation and regulations 92, 93 and 96 (further provisions about termination awards)—

“employee” includes a former employee; and

“employer” includes a former employer.

Termination awards: return if award changes

92

(1) Paragraph (3) applies if—

(a) information has not been provided by the employer under regulation 91(1) solely because either—

(i) the total amount of payments and other benefits awarded in the tax year in respect of the employee is estimated in accordance with regulation 91(2)(c) not to exceed £30,000, or

(ii) the award made in the tax year consisted of payments only, and

(b) there is a change in the award in a subsequent tax year.

(2) “Change in the award” means—

(a) that there is a change in—

(i) the amount of the payments awarded, or

(ii) the nature and amounts of the other benefits awarded,

so that the total amount of those payments and other benefits is estimated in accordance with regulation 91(2)(c) to exceed £30,000; or

(b) that the nature of the award is changed so that it consists—

(i) of payments combined with other benefits, or

(ii) solely of other benefits,

estimated in accordance with regulation 91(2)(c) to exceed £30,000.

(3) The employer must, before 7th July following the tax year in which the change in the award occurred, provide the Inland Revenue with the information specified in regulation 91(3) with respect to those payments and other benefits.

(4) Paragraph (5) applies if, after the employer has provided information in accordance with regulation 91(1) or paragraph (3) above, there is a material change—

(a) in the amount of the payments awarded, or

(b) in the nature and amounts of the other benefits awarded,

in relation to the employee.

(5) The employer must, before 7th July following the end of the tax year in which the material change occurred, give details of the material change to the Inland Revenue.

(6) For the avoidance of doubt, an employer is not required to provide details under this regulation of a change which arises solely because of amendments to the provisions of ITEPA which relate to non-cash benefits.

(7) This regulation is subject to regulation 93 (return if more than one employer).

Termination awards: return if more than one employer

93

(1) This regulation applies if the payments and other benefits aggregated in accordance with regulation 91(2)(c) include amounts in respect of different employments with more than one employer.

(2) The person who must provide information to the Inland Revenue under regulation 91 or 92, or to the employee under regulation 96, is the employer providing the greatest amount of payments and other benefits so aggregated.

Information to be given to employees

Employers: information to employees of other earnings (Form P11D)

94

(1) Before 7th July following the end of a tax year, the employer must give a statement to every current employee in respect of whom particulars are to be provided under regulation 85(1) by the employer for that tax year.

(2) The statement must contain the particulars provided under regulations 86 and 87 in so far as they relate to the employee.

(3) If a person who was a current employee ceases to be an employee at any time before 7th July following the end of the tax year, the statement is given to the employee if it is sent or delivered to, or left at, that person’s usual or last known address.

(4) A former employee in respect of whom particulars are to be provided under regulation 85(1) by the employer for a tax year may by notice require the employer to give the statement specified in paragraph (2) to that former employee—

(a) before 7th July following the end of the tax year, or

(b) within 30 days of receiving the notice,

whichever is the later.

(5) The notice may be given to the employer at any time up to 3 years after the end of the tax year.

(6) A former employee who has received a statement from the employer under paragraph (4) in respect of a tax year may not require a further statement from the employer under that paragraph in respect of the same tax year.

(7) In this regulation—

“current employee” means a person who was an employee on 5th April in the tax year to which the particulars provided under regulation 85(1) relate;

“former employee” means a person who was an employee during a part of the tax year to which the particulars provided under regulation 85(1) relate, but who was no longer an employee on 5th April in that tax year.

Third parties: information to employees of other earnings

95

(1) This regulation applies if a person (“the third party”) has, in a tax year—

(a) made any unrelated payments to, or on behalf of, another person’s employee, or

(b) provided any unrelated benefits to, or in respect of, another person’s employee.

(2) Before 7th July following the end of the tax year, the third party must give the employee a statement containing such of the particulars specified by regulations 86 and 87 as relate to the unrelated payments or unrelated benefits.

(3) A benefit or payment is “unrelated” if—

(a) the employee’s employer is not required to provide particulars about it under regulation 85(1), and

(b) the third party would have been required to provide particulars about it under regulation 85(1) had the third party been the employee’s employer.

Termination awards: information to employees

96

(1) This regulation applies if an employer is required to provide the information specified in regulation 91(3) to the Inland Revenue by—

(a) regulation 91(1) (termination award), or

(b) regulation 92(3) (change in termination award).

(2) The employer must also give a copy of that information to the employee before 7th July following the end of the tax year.

(3) A copy of the information is given to the employee if it is sent or delivered to, or left at, the employee’s usual or last known address.

(4) As to the person who is the employer in cases where there is more than one employer, see regulation 93.

CHAPTER 3 — PAYE RECORDS

Inspection of employer’s PAYE records

97

(1) An employer must keep and preserve for not less than three years after the end of the tax year to which they relate all PAYE records which are not required to be sent to HMRC by other provisions in these Regulations.

(2) The duty under paragraph (1) to keep and preserve PAYE records may be discharged by preserving them in any form or by any means.

(3) “PAYE records” means the following documents and records—

(a) all wages sheets, deductions working sheets, documents completed under regulation 46 (Form P46) , information provided under regulation 40A(1) (duty of employee to assist with completion of new employee fields in returns under regulations 67B and 67D) and other documents and records relating to—

(i) the calculation of the PAYE income of the employees,

(ii) relevant payments to the employees, or

(iii) the deduction of tax from, or accounting for tax in respect of, such payments, and

(b) all documents relating to any information which an employer is required to provide to HMRC under regulation 85 (Form P11D).

PART 5 — EMPLOYERS

Special arrangements

Multiple PAYE schemes

98

(1) An employer may elect, for the purposes of these Regulations, to be treated as different employers in relation to different groups of employees.

(2) Where the employer makes an election, these Regulations apply as if—

(a) in respect of each group the employer were a different employer;

(b) each group constituted all of the employer’s employees;

(d) an employee who has moved from one group to another has left one employment and started employment with a new employer;

(e) an employee who is allocated to more than one group has more than one employment; and

(f) an employee who is deallocated from one group has left an employment

(3) While an election is in force, an employer must allocate any new employees to at least one of the groups.

(4) An election must be made by notice to the Inland Revenue containing—

(za) the tax month from which the election is to have effect,

(a) such information as may be necessary to identify the groups of employees, and

(b) a certificate that each employee falls into at least one of the groups.

(5) An employer must ... make an election before the beginning of the tax month immediately preceding the tax month from which the election is to have effect.

(5A) A late election will be treated as if it had been made in relation to the tax month immediately following the tax month from which the election was stated to have had effect.

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

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

(8) An election continues in effect until revoked by a notice given to the Inland Revenue.

(9) A notice of revocation must be given before the beginning of the tax month for which the election is to be revoked, but the revocation of an election does not prevent the making of a new election for that or a later tax month.

(10) An election which has not yet come into effect may be revoked at any time before the beginning of the tax month for which it is to have effect.

(11) This regulation is subject to regulation 99.

Multiple PAYE schemes: election made for improper purpose ineffective

99

(1) An election made under regulation 98 must be disregarded if the Inland Revenue—

(a) issue a notice to the employer stating that it appears to them that the election is made wholly or mainly for an improper purpose (“an improper purpose notice”), and

(b) issue the improper purpose notice within 60 days of the making of the election.

(2) An election is made for an “improper purpose” if it is made for the purpose of—

(a) avoiding the requirement imposed by regulation 199 (large employers required to make specified payments electronically),

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) An employer may appeal against an improper purpose notice by giving notice to the Inland Revenue within 30 days of the issue of the improper purpose notice.

(4) The grounds of appeal are—

(a) that the election was not made wholly or mainly for an improper purpose, or

(b) that the improper purpose notice was not issued within 60 days of the election.

(5) If the appeal is successful the improper purpose notice must be withdrawn.

(6) Regulation 217 (appeals: supplementary provisions) applies to appeals under this regulation.

Tips: special arrangements

100

(1) This regulation applies if an organised arrangement exists for tips to be shared among employees by a person (“T”) who is not the principal employer.

(2) On becoming aware of the existence of an arrangement, the principal employer must notify the Inland Revenue about the arrangement giving T’s name, if known.

(3) For the purposes of these Regulations—

(a) every payment made to an employee by way of the employee’s share of tips by T (including the retention by T of T’s own share if T is also an employee) is regarded as a relevant payment by T; and

(b) to the extent of any such payment, T is regarded as the employer.

(4) But if in any case the Inland Revenue are satisfied that T has failed to comply with any of the requirements of these Regulations and they so direct, then—

(a) any tips paid to T through the principal employer for sharing among the employees are to be dealt with in accordance with paragraph (5), and

(b) any other tips may be taken into account by the Inland Revenue under regulation 14(1)(b) in determining the code for each employee.

(5) If this paragraph applies—

(a) the principal employer is treated as the employer for the purposes of these Regulations in relation to the tips;

(b) T must, before the principal employer pays any tips to T, give the principal employer such particulars of every payment by way of the sharing of tips to be made to an employee as may be necessary to enable the principal employer to comply with these Regulations;

(c) the principal employer must, on making any payment of tips to T, deduct or repay tax in accordance with these Regulations in respect of the amount of such tips to be paid to each employee, and notify T of each amount so deducted or repaid.

(6) Paragraph (2) does not apply if the arrangement came into existence before 6th April 2004.

(7) In this regulation—

“the principal employer” means the person under whose general control and management the employees work;

“tips” means gratuities and service charges.

Death of employer and succession

Death of employer

101

(1) This regulation applies if an employer dies.

(2) Anything which the employer would have been liable to do under these Regulations must be done by the employer’s personal representatives.

(3) But if the employer made payments on behalf of another person (“the principal”), anything which the employer would have been liable to do under these Regulations in respect of or in connection with those payments must be done by the principal.

Succession to a business etc

102

(1) This regulation applies if there is a change in an employee’s employer while the employee remains in employment in the same business.

(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 TMA²⁸ (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 1882²⁹.

(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 1989³⁰ for the purposes of section 86 of TMA³¹.

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 ICTA³².

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 1972³³,payments within regulations made under section 18(1) of the Local Government and Housing Act 1989³⁴,payments within regulations made under section 100(1)(a) or (c) of the Local Government Act 2000³⁵,payments by way of attendance allowance within section 47(1) of the Local Government (Scotland) Act 1973³⁶, orpayments within regulation 3(1), 4(1) or 5(1) of the Local Government (Payments to Councillors) Regulations (Northern Ireland) 1999³⁷;

“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) 1972³⁸; and

“local authority” in England and Wales has the meaning given in section 270(1) of the Local Government Act 1972³⁹, and in Scotland has the meaning given in section 235(1) of the Local Government (Scotland) Act 1973⁴⁰.

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 1996⁴¹ or, in Northern Ireland, the Jobseeker’s Allowance Regulations (Northern Ireland) 1996⁴²;

“jobseeker’s allowance” means benefit payable under—the Jobseekers Act 1995⁴³, orin Northern Ireland, the Jobseekers (Northern Ireland) Order 1995⁴⁴;

“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.

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