PAYE tolerances for 2010/11Monday, April 18th, 2011
The following is an extract from the latest weekly informal update (dated 8 April) from HMRC to employer representatives.
A tolerance has been used since the introduction of PAYE to accommodate the rounding up and down that automatically happens when the tax tables are used to calculate weekly/monthly tax deductions.
We have applied a tolerance of £50 for at least the last two decades. This meant that when we checked the tax deducted for customers at the end of each tax year, we would not take any action in respect of underpayments of tax of less than £50.
In September 2010 it was announced that the tolerance would be temporarily increased to £300. This temporary increase covered the years 2007-08, 2008-09 and 2009-10 while we worked on the reconciliations for those years. Work to clear those years is largely complete, and we are now in a position to manage the EOY reconciliation for 2010-11 without any increased tolerance.
The tolerance for 2010-11 will revert to £50. This means that where an underpayment of tax of more than £49.99 arises for the year 2010-11, a tax calculation will be sent to the customer.
For many years we have not automatically issued repayments under £10 as the cost of processing and printing a relatively small repayment can cost more than the amount being refunded. We will continue to repay any amount claimed by a customer.