SolvedPAYE93038 | Reconcile individual: end of year reconciliation: net of tax arrangements
From HM Revenue & Customs · PAYE Manual
A full explanation around net of tax arrangements, employers obligations and the initial action to take on the PAYE Service record, can be found at PAYE82001 (EPAPP5).
Notes:
| 1. | Where you are notified that a net of tax arrangement is in place and the decision is reached that an NT coding is appropriate for CY-1, CY or CY+1, the Inhibit Automatic Reconciliation signal should be set on the PAYE Service record CY (if the NT code should apply to CY-1). |
| 2. | There is currently no facility to record a non-refundable tax credit on the PAYE Service. Guidance is available at PAYE93036 on how to insert a notional tax credit onto the PAYE Service. |
The following guidance explains the action to take once the employer has filed forms P35 / P14 and you receive a list of employees affected by the arrangement.
Where the list is received and P14 is not on the PAYE Service pay / tax summary
Update the customer’s IABD record in accordance with PAYE93036 to give the notional tax credit
Unset the Inhibit Automatic Reconciliation indicator (PAYE93015) for CY-1. This will allow the case to reconcile automatically (to include the notional tax credit recorded above) when all information required to reconcile the year is held on the customer’s record
If not already set and the employment concerned is ongoing, set the Inhibit Automatic Reconciliation indicator (PAYE93015) for CY
Update Contact History with details of the action taken