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'Coding out' debt limit to increase

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Following positive responses to consultation, the government is to go ahead with plans to increase the maximum amount of tax debts that HMRC can collect through an individual’s PAYE tax code up to a maximum of £17,000, based on a graduated scale of earnings between £30,000 and £90,000. The current limit of £3,000 for PAYE underpayments or SA balancing payments will continue.

The statutory limit which prevents an employer deducting more than 50% of an employee’s relevant pay will be extended to all tax codes. This latter proposal was particularly well received as it ensures that changes to coding out continue to offer taxpayers proper protection from hardship

The changes are expected to apply from April 2015.