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Employer FAQ – HMRC Questions and Answers
Monday, May 18th, 2009
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The following questions and answers are reproduced from the latest issue (May 2009) of Notes for Payroll Software Developers. They are also included in the latest Guide for pension and annuity payer, which provides guidance, in addition to that contained in booklet CWG2 Employer Further Guide to PAYE and NICs, to assist pension and annuity payers, following the introduction of the new form P46(Pen) in April 2009.
Do I need to tell HMRC if there is an error on a P6 for a pensioner?
There is no existing obligation to report P6 errors for pension recipients – or any other employee. However, it would be helpful if you tell us if you identify an incorrect name, works number etc.
If HMRC issues a cumulative code which disadvantages the pension recipient should I still apply it?
There is no requirement to contact HMRC. However, it would be helpful if you contacted us should you identify an incorrect code number leading to a large repayment or large deduction of tax.
Can I submit a P45 Part 1 with a date of cessation in a previous tax year?
A P45 Part 1 should be submitted on the date the last payment is made or as soon as possible after that date. There is no validation to stop them being issued for the previous tax year (or up to 6 years ago).
I have included incorrect pay or tax figures on a P45 Part 1 I have sent in, what should I do?
You should not send a revised P45 Part 1 if the original is wrong. You should include the correct pay and tax figures on both the P11 and P14. However, it is helpful if you do tell us, as this may help to avoid refunding tax incorrectly to the pension recipient.
When a pension is paid for the first time, and includes several months’ payments, what code should I use?
If the back payments are made in the same tax year in which the pension starts, the code should be operated on a Week1/Month 1 basis. You should only allow tax-free pay due for the month in which the payment is made.
If the back payments are made in the following tax year, the code should be operated on a cumulative basis.
For example; pension starts on 6 December at £500 per month
1st payment made 6 March (£500 x 3 months) = £1,500. Use code on a Week 1/Month 1 basis using tax-free pay for March, or
1st payment made 6 May (£500 x 5 months) = £2,500. Use code on a cumulative basis using tax-free pay for May.
Can I put a future date of commencement on forms P45 Part 3 and P46(Pen) or a future date of cessation on form P45 Part 1?
You can include dates on forms P46(Pen), P45 Parts 1 and 3 that are today’s date or up to 30 days ahead.
What should I do if the pension recipient hands in form P45 Parts 2 and 3 after I have sent you a P46(Pen) but before HMRC has issued a code?
Check the pay and tax is correct and if it is, include it on the P11. Use the code shown on the form P45 Part 3 on a Week1/Month 1 basis.
If the first pension payment is to be made after 5 April carry forward the code shown on P45 Part 3 to the new tax year. Use the code number on a cumulative basis and apply any uplifts, if appropriate, as instructed on the P9X. You do not need to check the pay and details on the P45 Part 3 or enter them on the P11 in these cases. In general, if, as a pension payer, you are given a P45 Part 3, we would prefer you to send the details to us using P46(Pen). This will help HMRC to identify pension recipients when payments first start.
What should I do if the pension recipient hands in form P45 Parts 2 and 3 after HMRC has issued a code?
If form P45 Parts 2 and 3 are received after HMRC has issued a code, continue to use the code as notified and destroy the forms P45 Parts 2 and 3.
If the pension recipient dies and I send P45 Part 1 online, what should I do with P45 Parts 1A, 2 and 3?
There is no need to prepare or issue P45 Parts 1A, 2 or 3 if P45 Part 1 is sent online.
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