Coding notices for the 2011/12 tax yearFriday, February 25th, 2011
The following are extracts from the latest weekly informal updates (dated 11 and 18 February) from HMRC to employer representatives.
P9s – Annual coding message for employers
We have recently begun the annual process of sending out Coding Notices (P2) for the 2011-12 tax year to individuals. You may well get questions from your employees about these. Not everybody will receive a P2 and some people with more than one employment or pension may receive more than one; this is entirely normal. We expect to issue around 18m P9 Coding Notices during March to enable employers and pension providers to apply the codes as far as possible in time for April pay.
We expect to issue the bulk of P9 Coding Notices between 1 and 10 March. For those of you who receive notices electronically, we realise this is slightly later than you may expect. We are sorry about this; we know this is a busy time of year for you. However, we have been testing the system extensively in the run up to annual coding in order to ensure that the exercise runs more smoothly than last year for employers and individuals. The results of our testing show a significant improvement in accuracy this year and this is reflected in the P2s we have already issued.
As most notices are issued electronically, most employers and pension providers will receive them in time to apply the codes in time for April pay and pensions. For those of you who receive your P9 Coding Notices via the HMRC PAYE Online Service, we are extending the despatch of the codes to you to 7 days a week to ensure that you receive them as soon as possible. Employers who use EDI (Electronic Data Interchange) are unaffected by this as this is already a 7 day a week service.
However, issuing P9 Coding Notices in March may mean that a small number of employers (particularly those who receive paper P9s) do not receive the P9 Coding Notices in time to apply them to April payroll.
As we have said, we do not issue tax codes to every individual every year. If you do not receive P9 Coding Notices for some of your employees in time for your payroll run, please use the usual P9X procedure for them. This year this means carrying forward the authorised tax code from the 2010-11 form P11 to 2011-12 although if employers have received a 2010-11 tax code on a form P6 too late to use in 2010-11 they should carry forward this code instead. Employers will also need to add 100 to any tax code ending in L, for example 647L becomes 747L.
There is no need to contact us. You can find the 2011 P9X (Tax codes to use from 6 April 2011) at http://www.hmrc.gov.uk/helpsheets/2011/p9x.pdf
If you have chosen to receive P9 Coding Notices on paper this year, we would urge you to consider receiving them electronically in future and enrol for our PAYE online service. We set this system up some years ago, and the PAYE Desktop Viewer was introduced more recently to make access easier for a higher proportion of employers. This year nearly 90% of P9 Coding Notices will be issued electronically. Most employers prefer to receive them electronically as it is the most secure, efficient and cost effective method of handling such data. It’s also the most environmentally friendly method as it reduces the use of paper.
Self Assessment (SA) Autocoding and the National Insurance and PAYE Service (NPS) interface
I am also writing to let you know that we will be switching on our new SA Autocoding functionality early in 2011-12.
SA Autocoding will allow relevant information from an SA Return with a PAYE source to flow to NPS, and automatically calculate and issue revised codes. This will mean that the tax code will be more accurate and the right amount of PAYE tax paid. In advance of switching on the SA Autocoding functionality, we have been routinely updating tax codes when dealing with telephone calls and correspondence from customers.
Where a tax code has been revised for 2011-12 following a contact from a customer with up to date information, SA Autocoding will not override that adjustment but it will continue to update the code with any additional relevant information from the return. Customers who file SA Returns will continue to receive their annual statement of tax due. Payment dates remain the same. We will continue to code established SA underpayments of up to £1999.99. This is a separate interface and so not affected by the introduction SA Autocoding.
We will open the SA Autocoding interface early in 2011-12. This will be well in advance of returns being filed in any significant numbers, enabling 2011-12 codes to be updated as returns are filed. Should a return be filed before the interface is opened, the information in the return relevant to the coding will be stored and will flow to NPS once the interface is live.
Those submitting their SA Returns early in the year will receive most benefit from a coding adjustment as the revised code will operate for a longer period. In many cases, customer’s agents/representatives will submit SA Returns. Any revised autocoding will be sent to the customer. No copy will be sent to the agent/representative.
Regional Employer National Insurance Contributions (NICs) Holiday for New Businesses
We stated in the December 2010 edition of Notes for Payroll Software Developers (Series 12, Number 7, para 6.5) that a NICs Holiday End of Year Return will be required providing details of the NICs Holiday claimed.
For the 2010-11 tax year the electronic Return facility we originally anticipated will not now be available in time for employers to submit their NICs Holiday End of Year Return. Instead the end of year process that will be followed in support of the Holiday will be a manual one. This means HMRC will send a paper NICs Holiday End of Year Return to every employer who has submitted a successful application for the NICs Holiday. It is recommend that this is completed at the same time as the Employer Annual Return (P35 and P14s) to avoid discrepancies and whilst the P35 and P14s will need to be submitted online, an envelope will be provided for the NICs Holiday End of Year Return and forms E89 (or equivalent) to be posted in time to reach HMRC by 19 May 2011.
Detailed guidance to help employers complete their 2010-11 Employer Annual Return (P35 and P14s) and NICs Holiday End of Year Return will be available on the Business Link website before the end of March 2011. We will provide a further update on this in the next edition of Notes for Payroll Software Developers and in Employer Bulletin.
If you are a new business and not familiar with the Regional Employer National Insurance Contributions Holiday for New Businesses and what it could mean for you, please visit the Business Link website to find out further information and how to apply if you think you qualify.