 |
PAYE
TOLERANCE REDUCED FROM 2010-11 |
A tolerance has been used since the
introduction of PAYE to accommodate the rounding up and down
that automatically happens when the tax tables are used to
calculate weekly/monthly tax deductions. For the past two
decades, this tolerance has been 50.
In September 2010, the tolerance was
temporarily increased to 300. It covered 2007/08, 2008/09
and 2009/10 while HMRC worked on the reconciliations for
those years. Work to clear the years is largely complete,
and the department says it is now in a position to manage
the end-of-year reconciliation for 2010/11 without an
increased tolerance.
The tolerance for 2010/11 will therefore
revert to 50, meaning that where an underpayment of tax of
more than 49.99 arises for the year 2010/11, a tax
calculation will be sent to the taxpayer.
Commenting on the implications of the new
tolerance, the head of Payroll Alliance, Linda Pullan, said,
Now that HMRCs new computer system, NPS, is carrying out the
annual PAYE reconciliation and the annual tolerance level
for underpayments of tax has been reduced from 300 to 50 for
2010/11, taxpayers will see more and more P800 tax
calculations being issued.
Ms Pullan added that this is particularly
relevant where employers are operating weekly or multi week
payrolls and have processed a week 53, 54 or 56 as NPS does
not recognise these additional weeks and therefore makes no
additional allowance for the underpayment of tax.
Back to the Top
Back to News Items |
