Baker Watkin chartered accountants and chartered tax adviser

Baker Watkin

Middlesex House

Rutherford Close

Stevenage SG1 2EF

t: 01438 750555

e: enquiries@bakerwatkin.co.uk

Notices of coding and basic rate codes

Basic rate codes (BR) will be no more and from 6 April there will be changes to the the Emergency Code which employers are required to use where no tx code is available.

The Emergency code is used when a new employee cannot provide their employer with a P45 and has other employment. It is also relevant where payments are made after the employment has ended and a P45 has been issued.

Currently employers must use code BR and this requires tax to be deducted from the payroll at basic rate. From 6 April 2011 the appropriate code will be 0T. This requires tax to be deducted at basic and higher rates where appropriate. The extent to which it will make a difference to the tax deducted will depend both on the size of the payment and the time in the tax year when the payment is made.

Thus payments made early in the tax year where only a relatively small proportion of the Basic Rate Band is available to be taken into account under code 0T will be most affected. If you require further advice on this or other PAYE matters please contact Andrew Watkin at awatkin@bakerwatkin.co.uk or call me on 01438 750555.

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The information contained in this briefing is based on information available as at 24 February 2011 and may be subject to amendment. It is written as a general guide and is not a substitute for professional advice. You are strongly recommended to obtain specific professional advice from us before you take any action. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this briefing can be accepted by Baker Watkin or the partners.