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HMRC invites agents to discuss £3,000 PAYE threshold

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The PAYE ‘coding out’ limit for tax underpayments remains at £2,000 for 2010/11 tax returns, but HMRC has invited agents to contact the department to discuss the possibility of arranging coding adjustments for up to £3,000.

Regulations increasing the limit did not come into effect until July 2011, so the change was not reflected in 2010/11 returns.

The department recognises that ‘some self assessment customers with balancing payments between £2,000 and £3,000 might like to take advantage of the increased coding out limit and have it reflected in their 2012/13 tax code’.

Agents with clients in this position should ‘contact HMRC through their dedicated telephone number by 30 December 2011 to discuss whether a balancing payment can be coded out in this way’.

HMRC added: ‘There will not be the option to request retrospective coding out in those cases where customers have already paid or agreed a repayment plan to settle outstanding tax.’

The revised limit applies to ‘non-self assessment’ underpayments from 2010/11 onwards, however.

‘So for example, a 2010/11 informal tax calculation (P800) issued after October 2011 showing an underpayment of less than £3000 will automatically be included in the 2012/13 tax code (subject to there being sufficient PAYE income from a continuing employment/UK based pension).’