Section 193A Net pay arrangements: disparity with relief at sourceF1F5

Where—

the Commissioners for His Majesty’s Revenue and Customs must make arrangements to secure that, so far as reasonably practicable and subject to provision made under subsection (5), they pay the individual the amount of the difference.

“The section 193 amount” is the higher of—

“The hypothetical section 192 amount” is the amount given by assuming that relief had been given to the individual in accordance with section 192 (relief at source) instead of section 193 and taking the following steps on the basis of that assumption—

• Step 1

  Determine the amount that the individual would have been entitled to deduct out of the contribution under section 192(1).

• Step 2

  If section 192A or 192B (adjustments for differences between basic rate and Scottish or Welsh rates) would have applied by reference to the individual and the contribution, adjust the amount determined at Step 1 by (as the case may be)—

  1. (a)

     adding to it the amount of the tax reduction to which the individual would have been entitled under section 192A(1), or

  2. (b)

     subtracting from it the amount of tax for which the individual would have been treated as liable under section 192B(1).

• Step 3

  If the individual’s liability to income tax for the relevant tax year would have been reduced by virtue of the application of section 192(4) (increase in basic rate and higher rate limits) by reference to the contribution, add the amount of the reduction to the amount determined at Step 2 (or, where Step 2 does not apply, to the amount determined at Step 1).

The arrangements must secure that an amount which the Commissioners are required to pay in relation to a contribution is paid as soon as reasonably practicable after the tax year in which the contribution is paid.

The arrangements must include a procedure for the purposes of allowing an individual to whom an amount would otherwise have to be paid under subsection (2) to decline to receive that amount.

If an amount is paid to a person under subsection (1) that ought not to have been paid to the person, the amount may be assessed and recovered as though it were an amount of income tax due from the person for the relevant tax year.

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The Treasury may by regulations amend or otherwise modify this section.

Regulations under subsection (9) may make different provision for different purposes.