Possibly HMRC’s next last words about tax code 0TFriday, December 17th, 2010
In our article two weeks ago, we mentioned a number of situations where HMRC’s guidance on the use of tax code 0T from April 2011 needed clarifying in terms of whether it should be applied cumulatively or non-cumulatively. We have received replies from HMRC, as follows:
- Where box C of form P46 is selected by the employer in the situation where the new employee has not ticked any box, code 0T must be applied cumulatively, not on a W1/M1 basis as we indicated.
- Where a payment is made to a leaver after the P45 has been issued, tax code 0T must be applied on a W1/M1 basis to
- “standard payments”, i.e. final wages, holiday pay, arrears of pay, etc. (CWG2 page 15), and
- one-off termination payments, i.e. those to which the £30,000 tax exemption may apply. (CWG2 page 99)
- Where an employer starts to make pension payments to an employee who is continuing to be paid in the same employment, tax code 0T must be used for the pension payments on a W1/M1 basis.