Tax debts regulations ( UK pounds)
Regulations introducing a graduated scale for recovery of tax and tax credit debts through a taxpayer’s PAYE code have been laid before Parliament. The measures, introduced following consultation, will permit more debts to be collected in a “relatively simple, cheap and less intrusive way”, HMRC said.
The limit on the amount that can be “coded out” is increased from £3,000 to £17,000 for those whose PAYE income is expected to be at least £90,000. There will no change for those with incomes of less than £30,000, and there will be an overriding limit of 50% of income.
It is made clear that a person with tax credit debt can object to that debt being coded out.
The changes, set out in the Income Tax (Pay As You Earn) (Amendment No. 4) Regulations, SI 2014/2689 and the Income Tax (Earnings and Pensions) Act 2003 (Section 684(3A)) Order, SI 2014/2438, will take effect for 2015/16.
HMRC said in an explanatory note: “There is no change to HMRC’s powers to code out PAYE underpayments or [self assessment] balancing payments. There is no statutory upper limit for coding out such amounts, and HMRC will continue to code them out up to the current administrative limit of £3,000, unless the taxpayer objects.”
The ICAEW Tax Faculty noted that some commentators had confused this change with HMRC’s controversial proposals for direct recovery of debt. “But they are not the same thing,” the Faculty said.
Source: accountingweb- UK Tax debts regulations
