PAYE Regulations 2011 – an update
HMRC have published a Tax Information and Impact Note (TIIN) concerning the PAYE regulations 2011. The new regulations define the ‘0T’ (zero T) and ‘additional rate’ income tax codes with effect from 6 April 2011. The ‘0T’ code deducts income tax at the basic, higher and additional rates depending on the level of income in question, without giving any personal allowances. The additional rate income tax code will deduct tax at 50% only.
The TIIN makes it clear that payments under employee share plans after employment has ceased will continue to be taxed under the Basic Rate (BR) PAYE code where there is a liability to PAYE.
From 6 April 2011 employers are required to operate the ‘0T’ code:
- On employment income of a new employee – when the employee fails to complete form P46 (a form which tells the employer what tax code to operate where the employee does not provide them with form P45).
- On pension income of a person who is still in receipt of employment income.
- On payments made to an individual who has left their employment and the P45 has already been completed. The 0T code will not apply to payments made in connection with employment related securities. An employer will be required to operate BR code on these payments, as before.