Words in reg. 69(1A) renumbered as reg. 69(1A)(a) (with effect in accordance with s. 24(11) of the amending Act) by Finance Act 2026 (c. 11), s. 24(9)(a)(11)

778

Reg. 69(1A)(b) and word inserted (with effect in accordance with s. 24(11) of the amending Act) by Finance Act 2026 (c. 11), s. 24(9)(c)(11)

779

Reg. 80(5A) inserted (with effect in accordance with s. 24(11) of the amending Act) by Finance Act 2026 (c. 11), s. 24(10)(11)

780

Reg. 61C(9A) inserted (6.4.2026) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2026 (S.I. 2026/189), regs. 1, 2(2)

781

Reg. 207(1A)(1B) inserted (6.4.2026) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2026 (S.I. 2026/189), regs. 1, 2(3)

782

Reg. 207(2) omitted (6.4.2014) by virtue of The Income Tax (Pay As You Earn) and the Income Tax (Construction Industry Scheme) (Amendment) Regulations 2014 (S.I. 2014/472), regs. 1(2), 19

Employer’s request for a direction and appeal against refusal

72A

(1) In relation to condition A in regulation 72(3), the employer may by notice to the Inland Revenue (“the notice of request”) request that the Inland Revenue make a direction under regulation 72(5).

(2) The notice of request must—

(a) state—

(i) how the employer took reasonable care to comply with these Regulations; and

(ii) how the error resulting in the failure to deduct the excess occurred;

(b) specify the relevant payments to which the request relates;

(d) state the excess in relation to each employee.

(3) The Inland Revenue may refuse the employer’s request under paragraph (1) by notice to the employer (“the refusal notice”) stating—

(a) the grounds for the refusal, and

(b) the date on which the refusal notice was issued.

(4) The employer may appeal against the refusal notice—

(a) by notice to the Inland Revenue,

(b) within 30 days of the issue of the refusal notice,

(5) For the purpose of paragraph (4) the grounds of appeal are that—

(a) the employer did take reasonable care to comply with these Regulations, and

(b) the failure to deduct the excess was due to an error made in good faith.

(6) If on appeal under paragraph (4) that is notified to the tribunal it appears to the tribunal that the refusal notice should not have been issued the tribunal may direct that the Inland Revenue make a direction under regulation 72(5) in an amount the tribunal determines is the excess for one or more tax periods falling within the relevant tax year.

Employee’s appeal against a direction notice where condition A is met

72B

(1) An employee may appeal against a direction notice under regulation 72(5A)(a)—

(a) by notice to the Inland Revenue,

(b) within 30 days of the issue of the direction notice,

(2) For the purpose of paragraph (1) the grounds of appeal are that—

(a) the employer did not act in good faith,

(b) the employer did not take reasonable care, or

(3) On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may—

(a) if it appears ... that the direction notice should not have been made, set aside the direction notice; or

(b) if it appears ... that the excess specified in the direction notice is incorrect, increase or reduce the excess specified in the notice accordingly.

Employee’s appeal against a direction notice where condition A is met

72C

(1) An employee may appeal against a direction notice under regulation 72(5A)(b)—

(a) by notice to the Inland Revenue,

(b) within 30 days of the issue of the direction notice,

(2) For the purpose of paragraph (1) the grounds of appeal are that—

(a) the employee did not receive the payments knowing that the employer wilfully failed to deduct the amount of tax which should have been deducted from those payments, or

(b) the excess is incorrect.

(3) On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may—

(a) if it appears ... that the direction notice should not have been made, set aside the direction notice; or

(b) if it appears ... that the excess specified in the direction notice is incorrect, increase or reduce the excess specified in the notice accordingly.

Appeals: supplementary provisions

72D

(1) This regulation applies to appeals under regulations 72A(4), 72B, 72C, 72G and 81A.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(4) This paragraph applies if in respect of the same error by an employer in relation to condition A in regulation 72(3)—

(a) more than one employee is appealing under regulation 72B; or

(b) there is an appeal by an employer under regulation 72A(4) and by an employee under regulation 72B

...

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

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

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

(8) Where paragraph (4) applies or the appeal is material to the liability to tax of the employer and the employee, all the persons concerned are entitled to be parties to the appeal.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employee’s appeal against direction notice

81A

(1) An employee may appeal against a direction notice under regulation 81(4A)—

(a) by notice to the Inland Revenue,

(b) within 30 days of the issue of the direction notice,

(2) For the purpose of paragraph (1) the grounds of appeal are that—

(a) in relation to condition A in regulation 81, the employee did not receive the payments knowing that the employer wilfully failed to deduct the amount of tax which should have been deducted from those payments,

(b) in relation to condition B in regulation 81, the relevant payment was not a notional payment, or

(3) On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may—

(a) if it appears ... that the direction notice should not have been made, set aside the notice; or

(b) if it appears ... that the amount of tax specified in the direction notice is incorrect, increase or reduce the amount specified in the notice accordingly.

(4) Regulation 72D applies to appeals under this regulation.

Procedure in Form P46 Cases: Statement A applies

Procedure in Form P46 Cases: Statement B applies

Procedure in Form P46 Cases: Statement C applies or Form P46 not signed when required

Interpretation of Chapter 2A

133A

(1) In this Chapter—

“the Act” means the Finance (No.2) Act 2005 and a reference (without more) to a numbered provision is a reference to the provision of the Act bearing that number;

“the Department” means—in Great Britain, the Department for Work and Pensions; andin Northern Ireland, the Department for Social Development;

“lump sum” means a social security pension lump sum as defined in section 9 of the Act;

“the recipient” means a person who has become entitled to a lump sum.

Application of other Parts

133B

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

(2) The rest of these Regulations apply as if Her Majesty’s Revenue and Customs had issued a code in respect of a social security pension lump sum at either—

(a) the rate notified to the Department by the recipient pursuant to regulation 133D, or

(b) 20%, if the recipient has not notified the Department of a rate.

Determination of Rate of Deduction

133C

(1) On making any payment of a lump sum to a recipient during a tax year, the Department must deduct income tax at the ... rate calculated in accordance with sub-paragraph (2).

(2) For the purposes of this chapter the ... rate is either—

(a) the rate notified to the Department by the recipient in accordance with regulation 133D, or

(b) in default of any such notification, 20%.

Notification by Recipient of Notice of Tax Rate

133D

(1) The recipient shall notify the Department that he considers the nil tax code should be applied to the lump sum or that one of the following rates should be used—

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

(b) 20%, or

in accordance with section 7(5) of the Act.

(2) Notification shall be in the form, and made within the period, specified by the Department.

Certificate of tax deducted

133E

(1) On making any payment of a lump sum from which tax is deducted, the Department may and if the recipient so requires, must, give the recipient an award notification showing the following particulars.

(2) The particulars are—

(a) the recipient’s name,

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

(d) the amount of the payment, and

(e) the amount of tax deducted.

Repayment to recipient during tax year

133F

The Department may repay tax deducted from a lump sum to a recipient at any time during the tax year in which it was paid, if it appears to the Department that the incorrect rate of income tax was applied to the payment due to an administrative error by the Department.

Records and notices

133G

(1) The Department must record, in a deductions working sheet, the following particulars about any payment of a lump sum.

(2) The particulars are—

(a) the recipient’s name,

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

(d) the amount of tax (if any) deducted from the payment,

(e) the tax rate (if any) notified by the recipient to the Department, and

(f) the amount of any repayment made to the recipient in respect of the lump sum.

(3) The Department shall notify an officer of Revenue and Customs when a lump sum payment is made.

(4) The notification referred to in sub-paragraph (3) shall contain the following information—

(a) the recipient’s name and address,

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

(d) the recipient’s date of birth.

(5) The Department shall administer a separate PAYE scheme for the lump sum payments.

Other PAYE income of recipient

133H

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

Income subject to retrospective tax provision — information to employee

36A

(1) This regulation applies if—

(a) a payment is made to an employee;

(b) the employment in connection with which it was paid ceases;

(d) the tax year in which the payment was actually made is not closed, and

(e) the amount of the qualifying payment was not included in Form P45.

(2) If this regulation applies the person who made the payment must provide to the employee, without unreasonable delay after the relevant time, details of—

(a) the date on which the qualifying payment was actually made;

(b) the amount of the qualifying payment; and

PAYE income paid after employment ceased

Income paid after cessation of employment subsequently becoming subject to PAYE

37A

(1) This regulation applies if—

(a) a payment has been made, after the cessation of the employment, to a former employee—

(i) by the former employer, or

(ii) by any other person in respect of an obligation of the former employer;

(b) that payment becomes a qualifying payment after the employment ceased; and

(2) Where a qualifying payment has been made in a closed year, the employer must deduct tax, from any other payment made to the former employee in the tax period at the relevant time—

(a) in accordance with the last code used for the tax year in which the qualifying payment was made, or

(b) if the employer has not been notified of a code for that tax year, at the additional rate of tax applicable for that year.

(3) Where a qualifying payment has been made in an open year, the employer must deduct tax from any other payment made to the former employee—

(a) in accordance with the code in force in the final tax period in which the employee was employed, or

(b) if the employer has not been notified of a code, at the additional rate of tax applicable for that year.

(4) Neither the making of the qualifying payment, nor its subsequently becoming taxable, affect the cessation of the employment, and the provisions listed in regulation 37(4) do not apply in relation that payment.

(5) The employer must record the following information in a deductions working sheet for the tax year in which that payment was made.

Death of employee

Death of pensioner

Procedure in cases of retrospective earnings: code treated as issued by HMRC

50A

(1) If—

(a) as a result of a retrospective tax provision, a qualifying payment was made in a year (whether open or closed) to a person, and

(b) a code has never been issued to the employer in respect of employment with whom that qualifying payment was made,

paragraph (2) applies.

(2) Where this paragraph applies the higher rate code applicable to the year in which the qualifying payment was made is treated, for the purposes of Parts 2 to 4 (codes, deduction and repayment of tax, payments, information and returns) as having been issued by HMRC as the code for use in respect of the employee in relation to that year.

(3) Paragraph (2) does not apply for the purposes of regulation 18 (objections and appeals) and regulations 46 to 49E and 51 to 53 (Form P46 procedure and late presentation of Form P45).

Late presentation of Form P45

Late presentation of Form P45: employer’s duties

Form P46 cases: subsequent procedure on issue of employee’s code

Deduction working sheets: retrospective employment income in closed tax year

66A

(1) Paragraph (2) applies if—

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The Income Tax (Pay As You Earn) Regulations 2003

Employer’s request for a direction and appeal against refusal

72A

Employee’s appeal against a direction notice where condition A is met

72B

Employee’s appeal against a direction notice where condition A is met

72C

Appeals: supplementary provisions

72D

Employee’s appeal against direction notice

81A

Procedure in Form P46 Cases: Statement A applies

Procedure in Form P46 Cases: Statement B applies

Procedure in Form P46 Cases: Statement C applies or Form P46 not signed when required

CHAPTER 2A — SOCIAL SECURITY LUMP SUMS

Interpretation of Chapter 2A

133A

Application of other Parts

133B

Determination of Rate of Deduction

133C

Notification by Recipient of Notice of Tax Rate

133D

Certificate of tax deducted

133E

Repayment to recipient during tax year

133F

Records and notices

133G

Other PAYE income of recipient

133H

Income subject to retrospective tax provision — information to employee

36A

PAYE income paid after employment ceased

Income paid after cessation of employment subsequently becoming subject to PAYE

37A

Death of employee

Death of pensioner

Procedure in cases of retrospective earnings: code treated as issued by HMRC

50A

Late presentation of Form P45

Late presentation of Form P45: employer’s duties

Form P46 cases: subsequent procedure on issue of employee’s code

Deduction working sheets: retrospective employment income in closed tax year

66A