Employer PAYE Obligations from 6 April 2011

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Changes announced from HMRC

HMRC has announced plans to amend the Income Tax (Pay as You Earn) Regulations 2003 (the “PAYE Regulations”).

Currently employers are only required to withhold income tax at the basic rate of 20% when making post-termination payments to employees. From 6 April 2011, employers will now be required to withhold income tax at rates of up to 50%

From 6 April 2011 it will mean that employers can no longer operate the BR code when making post termination payments. Using the BR code means employees are only taxed a basic rate deduction on payments at the time they are made and only account for any additional rate tax (of up to 50%) through self assessment at a later date.

Employers will now need to use the 0T code when deducting PAYE from payments made to employees after they leave their employment.

Other Changes

Also from 6 April 2011 employers will be required to operate the 0T code for all employees who start a new employment but who do not provide a P45. This will mean that the employee is taxed at the basic and/or higher and/or additional rate as appropriate. 

17 January 2011

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About Throgmorton: Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing in the UK SME financial services sector.

The information in this notice is intended for general guidance only. Throgmorton does not accept any responsibility for losses incurred to any person acting or refraining to act as a result of the information in this notice. Advice should be taken in the context of specific circumstances.