Explanatory note

These Regulations amend the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682) (“the principal Regulations”) which make provision for the assessment, charge, collection and recovery of income tax in respect of all pay as you earn (“PAYE”) income.

The amendments are made in conjunction with the Income Tax (Earnings and Pensions) Act 2003 (Section 684(3A)) Order 2014 (S.I. 2014/2438) which increases the coding out limit in respect of relevant debt from £3,000 to £17,000.

Regulation 1 provides for citation, commencement and effect.

Regulation 3 amends the definition of “overriding limit” in regulation 2 of the principal Regulations.

Regulation 4 inserts into the principal Regulations new regulations 14C and 14D. New regulation 14C makes specific provision for the coding out of child tax credit or working tax credit that is repayable to HMRC.

New regulation 14D provides for an overall limit for the total amount of relevant debt and tax credit debt that may be recovered from an employee in a tax year by a code determined for that purpose. The maximum amount that may be recovered ranges from £3,000 to £17,000 depending on the expected PAYE income of the employee in the tax year for which that code is determined.

Regulation 5 applies the overriding limit to all deductions made from relevant payments.

Regulations 6 and 7 make consequential amendments to the principal Regulations.

A Tax Information and Impact Note covering this instrument will be published on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm.