The Income Tax (Pay As You Earn) (Amendment No. 4) Regulations 2014

• Citation: S.I. 2014/2689
• Sections: 7

Section 1 Citation, commencement and effect

(1) These Regulations may be cited as the Income Tax (Pay As You Earn) (Amendment No. 4) Regulations 2014, and come into force on 1st November 2014, subject to paragraph (2).

(2) Regulations 3 and 5 to 7 come into force on 6th April 2015.

(3) Regulation 4 has effect in relation to codes determined for use by an employer in respect of an employee for the tax year 2015-16 and subsequent tax years.

Section 2 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

The Income Tax (Pay As You Earn) Regulations 2003 are amended as provided for in regulations 3 to 7.

Section 3 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

In regulation 2 (interpretation) for the definition of “overriding limit” substitute—

“overriding limit” means the limit on the amount of tax to be deducted from a relevant payment and is an amount equal to 50% of the amount of the relevant payment;

Section 4 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

After regulation 14B (determination of code in respect of high income child benefit charge) insert—

Determination of code in respect of recovery of tax credit debts

(14C)

(1) HMRC may determine a code, if and to the extent that the payee does not object, to effect the recovery of all or part of a tax credit debt.

(2) Sums deducted or to be deducted as a result of a determination made in reliance on paragraph (1) are to be treated, for the purposes of employers’ obligations and enforcement, in the same way as amounts of tax which the employer is liable to pay under provisions of these Regulations (so, for example, regulation 84 applies for the purposes of recovery).

(3) Sums deducted as a result of a determination made in reliance on paragraph (1) are to be treated for the purposes of interest on the tax credit debt as having been paid on the first day of the tax year in respect of which the determination is made.

(4) In this regulation “tax credit debt” means child tax credit or working tax credit that the payee is liable to repay to the Commissioners under or by virtue of an enactment.

Recovery of debts: overall limit

(14D)

(1) This regulation applies where HMRC determines a code under, or by reference to, one or both of the following provisions—

(a) regulation 14A(1) (determination of code in respect of recovery of relevant debts) ; or

(b) regulation 14C(1) (determination of code in respect of recovery of tax credit debts).

(2) Column 2 of Table 1A sets out the total amount of debt that may be recovered from an employee (“E”) under a code to which this regulation applies, by reference to the expected amount of PAYE income of E in the tax year for which that code is determined.

TOTAL AMOUNT OF DEBT THAT MAY BE RECOVERED

(3) In this regulation the “total amount of debt” means the sum recovered or to be recovered by virtue of a code determined under, or by reference to, one or both of regulations 14A(1) or 14C(1).

Section 5 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

In regulations 23(5), 28(5) and 144(4) omit “if the employee’s code is a K code,”.

Section 6 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

In regulation 66 (deductions working sheets) —

(a) for paragraph (6)(e) substitute—

(e) the tax due to be deducted at that date (subject to the overriding limit),

(ea) the overriding limit, if any, in relation to the payment,

(eb) the amount of any tax not deducted at that date because of the overriding limit, and

(b) in paragraph (8)(c) omit “if the employee’s code is a K code,”.

Section 7 Amendment of the Income Tax (Pay As You Earn) Regulations 2003

In regulation 161(5) (tax calculation) for the definition of “claimant’s total tax” substitute—

“claimant’s total tax” means the lesser of—

50% of the claimant’s total payments to date, and

the tax due in accordance with the appropriate tax tables in respect of the claimant’s total taxable payments to date at the relevant date;