From 6 April 2011 HMRC is introducing an OT tax code together with additional rate tax codes for higher earners (in order to collect tax at the upper rate of 50%).
Amendments are being made to the Income Tax (Pay as You Earn) Regulations 2003 SI 2003/2682
Key changes:
The definition of the emergency code is amended.
- HMRC will in appropriate circumstances to determine that an employer should deduct income tax at the additional rate.
- The 0T code is to be used instead of the basic rate (BR) code when PAYE income is paid after employment has ceased.
- The additional tax rate should be applied for higher rate tax payers on PAYE income paid after employment has ceased and which subsequently becomes subject to PAYE.
- A non-cumulative OT code is used where an employee commences employment without providing a P45 to the employer and where a code has not been issued by HMRC and the employee fails to provide specified information required in a P46 form.
- Where a pension is paid the employer uses the 0T tax code on the non-cumulative basis. There is a requirement for the pensioner to provide specified information in the Form P46(Pen). The regulation also requires the pension payer to indicate on the form that tax is being deducted using that Code on a non-cumulative basis.
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