From April 2012 HMRC will be able to collect individual's tax debts (including Tax Credit's overpayments) via PAYE.
Collection will be made by using a PAYE coding adjustment, but the mechanics are to be adminstered by the employer who will be required to make additional deductions made out of pay already subject to the PAYE and NICs.
Timetable
- No PAYE codes will be adjusted in year.
- HMRC will be writing to debtors in between August and October 2011 to request payment/agree liabilities.
- Codes will be issued from January 2012 for the 2012/13 tax year.
- Debts will be collected via PAYE codes from April 2012.
HMRC says:
If repaying the debt is going to cause financial hardship to any of your employees they can go to www.businesslink.gov.uk/problemspayingHMRC or if they have any queries about their tax codes as a result of this change, then please tell them to ring the number on the letter.
Employers
The employer may be put into a difficult position if an employee becomes upset by the extra deductions and the associated intrusion into his/her personal life. The employer may well take any "blame" and potentially may suffer as a result. Extra deductions may also affect staff moral and have the potential to create other adverse affects. Employers of all sizes will need to consider how exactly this policy will affect them.
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