HMRC in 0T Reversal

• Recommend on Facebook
• 
• Share on Linkedin
• share via Reddit
• Tweet about it
• Subscribe to the comments on this post
• Print for later
• Tell a friend

For the tax year 2011/12, HMRC changed the tax code that applied to payments made to employees where the P45 had been issued – ‘payments after leaving’.  From this tax year, we have had to make these payments against tax code 0T on a non-cumulative basis rather than the previous codeBR.  This was with the exception of payments made in respect of share-based income.

In an announcement on 20 December 2011, HMRC announced that this decision would be reversed from April 2012.  From the tax year 2012/13, all payments after leaving, however derived would be taxed using the code 0T on a non-cumulative basis.

HMRC advise that the change will require an amendment to the Income Tax (Pay As You Earn) Regulations.  They plan to issue these for a four week consultation in January 2012.

Comment

This change has come from a series of negotiations with a number of interested parties.  There is little doubt that this particular post-termination payment has been difficult for payrollers to administer as, frequently, these payments have been made up of more than one element – i.e. a cash part and a share-based element.  Under the rules that applied in 2011/12, this required tax code 0T to apply to one part and BR to apply to another, both on a non-cumulative basis.  The alignment of all post-termination payments being taxed on the one 0T non-cumulative code is a welcome one.

Tags: 0t, 0t tax code, 0t tax code changes, HMRC, PAYE

This entry was posted on Saturday, January 7th, 2012 at 11:18 and is filed under tax code. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.