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Tax code changes for employees paying 50% tax from April 2011
Wednesday, October 6th, 2010
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Tax code D1: When the new 50% Additional rate of tax was introduced in April 2010, HMRC announced that its systems were unable, at that time, to handle a tax code D1 for the employees affected. For the 2010/11 tax code, the correct liabilities for 50% tax payers will be assessed after the year end.
Some years ago, when there were a number of different higher rates of tax, a series of “D” tax codes was used – D0 (which is still in use), D1, D2, etc. HMRC has now announced that, from the 2011/12 tax year, D1 will be introduced and issued on P9 coding notices for employers to apply from the start of the tax year.
Tax Code 0T: Unexpectedly, HMRC has also announced that, from April 2011, employers will be able to allocate tax code 0T in response to an employee checking box C of the P46. Currently only BR can be allocated, although there has been repeated demand for D0 to be an acceptable response also. However, the reason why 0T should be an acceptable response to box C is currently unknown. At present it only used for P38(S) students whose earnings exceed the tax threshold, and only if they check either box A or B on the P46.
Further information:
Notes for Payroll Software Developers
