P46 Reporting Requirements - Employees earning between the lower earnings limit and the earnings threshold

View the next news item for PAYE Procedures
View the previous news item for PAYE Procedures

20 March 2008

Up to 6 April 2008, PAYE procedures, in most situations, require employers to complete a form P46 for new employees who do not provide a P45. If the employee's earnings do not exceed the tax/earnings threshold (£100 per week), employers are instructed to retain the completed P46 and only submit it when earnings exceed that threshold. (Despite this instruction, most employers with computerised payroll systems submit all completed P46s, irrespective of the employees' earnings, and HMRC does not object to that being done.)

From 6 April 2008, a change to PAYE procedures requires P46s to be submitted as soon as an employee's earnings exceed the lower earnings limit (£90). If employers are retaining P46s for employees whose earnings during 2007/08 have not exceeded the tax/earnings threshold in any pay period but their earnings at any point during 2008/09 exceed the lower earnings threshold, HMRC has instructed that the P46 should not be submitted. If the employer has not already created a full payroll record (not required by PAYE procedures until earnings reach or exceed the lower earnings limit), one should be created, using tax code 543L (cumulative) and incorporating any earnings that have already been paid without the deduction of any tax or NICs. A P14 should be issued at the end of the 2008/09 tax year.

...UK Payroll News - Latest

Further information:
Employer Helpbook E13(2008)
Notes for Payroll Software Developers

The UK Payroll News is sponsored by HRD & Payroll Solutions

Discuss this news item in the PayPerShop Forum