PAYE System Code Errors

Published on September 10, 2010 by Crawfords Accounting

Last month HMRC announced that many people whose total earnings mean that they should be paying 50% tax were given the wrong PAYE code. It is unknown how many people this refers to but HMRC do know that 300,000 should have been paying the top rate of tax.

HMRC have now declared that they will be recovering this money after the completion of all self-assessments by January 2012 which means that some new pensioners could receive a large tax bill to begin their retirement with. The people affected are those who earn over £150,000 from a combination of two jobs. Seemingly, the PAYE system was unable to process this information when the new tax rate was introduced back in April. Many of the professionals who will be required to repay the HMRC are company directors, hospital consultants, dentists and solicitors.

The HMRC explained the situation on their website: ‘Because we do not currently have an appropriate 50% tax code to apply to second or multiple employments, if you have employees, directors or pensioners with multiple sources of income then their tax deductions may not be accurate when their various incomes are combined and they become liable to tax at 50%.’

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