HMRC will provide funding for personal allowance change
Payroll agents will be gearing up for the implementation of this year’s amended personal tax-free allowance in the September payroll. The allowance was raised from £5,435 to £6,035 in May this year with retrospective effect to 6 April.
The raise is currently still expected to be a one-off event, and special guidelines have already been issued by HMRC explaining the tax code changes necessary for September (this guidance was highlighted in a previous update and can be found at the link below). The codes will be altered so as to, effectively, provide a refund for employees on the tax they “shouldn’t” have paid since 6 April. Normal practice, when an employee is owed tax, is for the employer to fund the refund out of their other PAYE deductions by reducing the next payment due to HMRC.
However, since this year’s changes will be on such a large scale, HMRC will provide funding for employers whose next payments will be insufficient to cover the employee refunds. An application for this funding may be made via the HMRC website and must include details of the HMRC Accounts Office dealing with the employment (either Cumbernauld or Shipley), the Account Office reference, the employer’s name and PAYE reference, the number of employees being claimed for and the total amount of funding being claimed for. The maximum funding available is the difference between the total deductions (PAYE tax, NICs etc) made from all employees and the total refunds the employer has to make.