Explanatory note

The Income Tax (Pay As You Earn) (Amendment) Regulations 2011 (“the Amendment Regulations”) amend the Income Tax (Pay As You Earn) Regulations 2003 (“the 2003 Regulations”) and come into force on 6th April 2011. These Regulations amend regulation 37 of the 2003 Regulations and come into force on 6th April 2011 immediately after the Amendment Regulations come into force. The amendment to regulation 37 of the 2003 Regulations made by these Regulations supersedes the amendment made to that regulation by the Amendment Regulations.

Regulation 3 amends regulation 37(2) of 2003 Regulations by substituting the 0T code on a non-cumulative basis for the basic rate code at which deductions are to be made from PAYE income paid after employment has ceased. New regulation 37(2) is subject to new regulation 37(2A) which provides that in relation to payments made in connection with securities, an interest in securities and securities options tax must be deducted at the basic rate. New regulation 37(2B) defines those terms by reference to section 420 of the Income Tax (Earnings and Pensions) Act 2003.

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