Income Tax (Earnings and Pensions) Act 2003

Chapter 2 U.K. PAYE: general

684 PAYE regulations U.K.

(1) [F1 The Commissioners F2 ...] must make regulations (“PAYE regulations”) with respect to the assessment, charge, collection and recovery of income tax in respect of all PAYE income.

(2) [F3 The provision that may be made in PAYE regulations includes] any such provision as is set out in the following list.

List of Provisions

1. Provision—

(a) for requiring persons making payments of, or on account of, PAYE income to make, at the [F4 relevant time], deductions or repayments of income tax calculated by reference to tax tables prepared by [F1 the Commissioners F5 ...], and

(b) for making persons who are required to make any such deductions or repayments accountable to or, as the case may be, entitled to repayment from the Board.

[F6 “The relevant time” is—

(a) if the payment is a notional payment for the purposes of section 710 and the person is treated by virtue of any Act as making it at a time before the date on which the Act is passed, that date, and

(b) in any other case, the time when the payment is made.]

[F7 1ZA. Provision—

(a) for authorising a person (“P”), in a case where the PAYE income of an employee (whether an employee of P or of another person) includes an amount charged to tax under any of [F8 Chapters 3 to 10] of Part 3 in respect of the provision of a benefit of a specified kind—

(i) to make deductions of income tax in respect of the benefit from any payment or payments actually made of, or on account of, PAYE income of the employee, or

(ii) to make repayments of such income tax,

(b) for any such deductions or repayments to be made at a specified time,

(c) for the amount of any such deductions or repayments to be calculated in accordance with the regulations,

(d) for the provision of the benefit to be treated for specified purposes as a payment of PAYE income, and

(e) for making persons who make any such deductions or repayments accountable to or, as the case may be, entitled to repayment from the Commissioners.]

[F9 1A. Provision—

(a) for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable in respect of any income of a payee for a tax year which is not PAYE income is deducted from PAYE income of the payee paid during that year; and

(b) as to the circumstances and manner in which a payee may object to the making of deductions.

2. Provision—

(a) for repayments or deductions to be made, if and to the extent that the payee does not object, in respect of any amounts overpaid or [F10 (or treated as overpaid) on account of, or any amounts other than relevant debts remaining unpaid (or treated as remaining unpaid)] on account of—

(i) income tax in respect of income for a previous tax year, or

(ii) capital gains tax in respect of chargeable gains for such a year; and

(b) as to the circumstances in which repayments or deductions may be made, and the circumstances and manner in which a payee may object to the making of repayments or deductions.

[F11 2ZA. Provision—

(a) for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable for a tax year by the payee by virtue of section 681B (high income child benefit charge) is deducted from PAYE income of the payee paid during that year,

(b) for repayments to be made in a tax year, if and to the extent that the payee does not object, in respect of any amounts overpaid on account of income tax under that section for that tax year, and

( c) as to the circumstances and manner in which a payee may object to the making of deductions or repayments.]

[F12 2A. Provision—

(a) for deductions to be made in respect of relevant debts of a payee,

(b) as to the circumstances in which such deductions may be made, and

( c) where such deductions are made, as to the date on which the relevant debts are to be treated as paid.]

3. Provision for the production to, and inspection by, persons authorised by the Board of wages sheets and other documents and records for the purposes of satisfying themselves that [F13 amounts have been and are] being deducted, repaid and accounted for in accordance with the regulations.

4. Provision for requiring an employer or former employer to provide any information, within a prescribed time, about payments or other benefits provided or to be provided, including those provided or to be provided in connection with—

(a) the termination of a person’s employment, or

(b) a change in the duties of or general earnings from a person’s employment.

[F14 4ZA. Provision-

(a) for authorising or requiring a person who provides with respect to payments of or on account of PAYE income a service that is specified or of a specified description (“a relevant payment service”) to supply to Her Majesty's Revenue and Customs information about payments with respect to which the service is provided, or any information the Commissioners may request about features of the service provided or to be provided with respect to particular payments;

(b) for conferring power on the Commissioners to specify by directions circumstances in which provision made by virtue of paragraph (a) or subsection (4ZB) is not to apply in relation to a payment;

(c) for securing that a supply of information that is authorised by regulations under paragraph (a) is not treated as breaching any obligation of confidence owed in respect of the information by the person supplying it;

(d) for prohibiting or restricting the disclosure, otherwise than to Her Majesty's Revenue and Customs, of information by a person to whom it was supplied pursuant to a requirement imposed by virtue of subsection (4ZB);

(e) for requiring a person who provides, or is to provide, a relevant payment service to take steps (including any steps that may be specified, or further specified, in accordance with item 8A(b)) for facilitating the meeting by persons making payments of obligations imposed by virtue of subsection (4ZB).]

[F15 4A. Provision authorising the recovery from the payee rather than the payer of any amount that [F16 an officer of Revenue and Customs] considers should have been deducted by the payer.]

[F17 4B. Provision for and in connection with requiring the giving, in specified circumstances, of security (or further security) for the payment of amounts in respect of which a person is or may be accountable to the Commissioners under the regulations.]

5. Provision for the way in which any matters provided for by the regulations are to be proved.

6. Provision—

(a) for requiring the payment of interest on sums due to the Board which are not paid by the due date,

(b) for determining the date (being not less than 14 days after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated, and

(c) for enabling the repayment or remission of such interest [F18 or interest under section 101 of FA 2009] .

7. Provision for requiring the payment of interest on sums due from the Board and for determining the date from which such interest is to be calculated.

[F19 7A. Provision for excluding payments of such description as may be specified from the operation of the regulations in such circumstances as may be specified. Provision for excluding payments of such description as may be specified from the operation of the regulations in such circumstances as may be specified.

8. Provision for the making of decisions by [F20 Her Majesty’s Revenue and Customs] as to any matter required to be decided for the purposes of the regulations and for appeals against such decisions.]

[F21 8A. Provision requiring compliance with any directions the Commissioners may give—

(a) about the form and manner in which any information is to be provided under the regulations;

(b) specifying, or further specifying, steps for the purposes of item 4ZA(e);

(c) specifying information that a person making payments of or on account of PAYE income must provide about the method by which the payments are made.]

9. Provision for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal.

10. Different provision for different cases or classes of case.

11. Any incidental, consequential, supplementary and transitional provision which appears to the Board to be expedient.

(3) [F22 The deductions of income tax—

(a) required to be made by PAYE regulations under item 1 in the above list, or

(b) which a person is authorised to make by PAYE regulations under item 1ZA in that list,

may be required to be made at the basic rate or other rates in such cases or classes of case as may be provided by the regulations.]

[F23 (3A) PAYE regulations under item 2A in the above list may not make provision enabling deductions totalling more than [F24 £17,000 ]to be made from a payee's income for a tax year without the payee's consent.

(3B) The Treasury may by order amend the amount specified in subsection (3A).]

[F25 (3C) References in items 4ZA and 8A of the above list to directions include directions making different provision for different cases.]

(4) Interest required to be paid by PAYE regulations under item 6 or 7 in the above list [F26 or by section 101 of FA 2009, in connection with sums due to the Commissioners under the PAYE Regulations,] must be paid without any deduction of income tax and may not be taken into account in computing any income, profits or losses for any tax purposes.

[F27 (4ZA) Item 8A in the above list does not prejudice the power of the Commissioners under subsection (1) to make provision in PAYE regulations about the matters mentioned in that item.

(4ZB) The persons to whom PAYE information regulations may require information to be supplied include, in the case of information about a payment, a person who provides, or is to provide, with respect to the payment a service such as is mentioned in item 4ZA(a) in the above list.

(4ZC) In subsection (4ZB) “PAYE information regulations” means PAYE regulations that require information to be supplied for any purpose authorised by subsections (1) and (2).]

[F28 (4A) A person who fails to comply with a requirement imposed under PAYE regulations to give security, or further security, for the payment of any amount commits an offence if the failure continues for such period as is specified; and a person guilty of an offence under this subsection is liable [F29 on summary conviction—

(a) in England and Wales, to a fine;

(b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale]]

(5) PAYE regulations must not affect any right of appeal to the [F30 tribunal] which a person would have apart from the regulations.

(6) It does not matter for the purposes of PAYE regulations that income is wholly or partly income for a tax year other than that in which the payment is made.

(7) PAYE regulations have effect despite anything in the Income Tax Acts.

(7A) [F31 Nothing in PAYE regulations may be read—

(a) as preventing the making of arrangements for the collection of tax [F32 or other amounts] in such manner as may be agreed by, or on behalf of, the payer and [F16 an officer of Revenue and Customs], or

(b) as requiring the payer to comply with the regulations in circumstances in which [F16 an officer of Revenue and Customs] is satisfied that it is unnecessary or not appropriate for the payer to do so.

[F33 (7AA) In this [F34 Part] “relevant debt”, in relation to a payee, means—

(a) a sum payable by the payee to the Commissioners under or by virtue of an enactment, other than an excluded debt, and

(b) a sum payable by the payee to the Commissioners under a contract settlement.

(7AB) For the purposes of subsection (7AA)—

(a) child tax credit or working tax credit that the payee is liable to repay is an excluded debt, and

(b) if the payee is an employer, any amount that the payee is required to deduct from the PAYE income of employees for a tax year is an excluded debt until the tax year has ended.]

(7B) References in this section and section 685 to income tax in respect of PAYE income are references to income tax in respect of that income if reasonable assumptions are (when necessary) made about other income.

(7C) In this section and section 685—

[F35 “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

“contract settlement” means an agreement made in connection with the liability of the payee or another person to make a payment to the Commissioners under or by virtue of an enactment;]

“payer” means any person paying PAYE income and “payee” means any person in receipt of such income;

“specified” means specified in PAYE regulations.]

(8) In this Act and any other enactment (whenever passed) “PAYE regulations” means regulations under this section.]

Textual Amendments

F1 Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(2); S.I. 2005/1126, art. 2(2)(h)

F2 Words in s. 684(1) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), Sch. 58 para. 2

F3 Words in s. 684(2) substituted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 3(2)

F4 Words in s. 684(2) substituted (with effect in accordance with s. 94(5) of the amending Act) by Finance Act 2006 (c. 25), s. 94(3)(a); S.I. 2007/1081, art. 2

F5 Words in s. 684(2) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), Sch. 58 para. 3(3)

F6 Words in s. 684(2) inserted (with effect in accordance with s. 94(5) of the amending Act) by Finance Act 2006 (c. 25), s. 94(3)(b); S.I. 2007/1081, art. 2

F7 Words in s. 684(2) inserted (26.3.2015) by Finance Act 2015 (c. 11), s. 17(2)

F8 Words in s. 684(2) substituted (15.9.2016) by Finance Act 2016 (c. 24), s. 15

F9 S. 684(2) Items 1A and 2 substituted for s. 684(2) Item 2 (10.7.2003) by Finance Act 2003 (c. 14), s. 145(1)(a)

F10 Words in s. 684(2) substituted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 3(4)

F11 S. 684(2) Item 2ZA inserted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2012 (c. 14), Sch. 1 para. 5(4)

F12 Words in s. 684(2) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 3(5)

F13 Words in s. 684(2) substituted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 3(6)

F14 S. 684(2) Item 4ZA inserted (17.7.2012) by Finance Act 2012 (c. 14), s. 225(2)(a)

F15 S. 684(2) Item 4A inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 145(1)(b)

F16 Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(1); S.I. 2005/1126, art. 2(2)(h)

F17 S. 684(2): Item 4B inserted (19.7.2011) by virtue of Finance Act 2011 (c. 11), s. 85(2)

F18 Words in s. 684(2) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments), Appointed Days and Consequential Provisions Order 2014 (S.I. 2014/992), arts. 1(1), 7(a)

F19 S. 684(2) Items 7A and 8 substituted for s. 684(2) Item 8 (10.7.2003) by Finance Act 2003 (c. 14), s. 145(1)(c)

F20 Words in s. 684 substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 117; S.I. 2005/1126, art. 2(2)(h)

F21 S. 684(2) Item 8A inserted (17.7.2012) by Finance Act 2012 (c. 14), s. 225(2)(b)

F22 S. 684(3) substituted (26.3.2015) by Finance Act 2015 (c. 11), s. 17(3)

F23 S. 684(3A)(3B) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 4

F24 Sum in s. 684(3A) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Income Tax (Earnings and Pensions) Act 2003 (Section 684(3A)) Order 2014 (S.I. 2014/2438), arts. 1, 2(2)

F25 S. 684(3C) inserted (17.7.2012) by Finance Act 2012 (c. 14), s. 225(3)

F26 Words in s. 684(4) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments), Appointed Days and Consequential Provisions Order 2014 (S.I. 2014/992), arts. 1(1), 7(b)

F27 S. 684(4ZA)-(4ZC) inserted (17.7.2012) by Finance Act 2012 (c. 14), s. 225(4)

F28 S. 684(4A) inserted (19.7.2011) by Finance Act 2011 (c. 11), s. 85(3)

F29 Words in s. 684(4A) substituted (12.2.2019) by Finance Act 2019 (c. 1), s. 82(3)

F30 Word in s. 684(5) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 338

F31 S. 684(7A)-(7C) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 145(2)

F32 Words in s. 684(7A)(a) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 5

F33 S. 684(7AA)(7AB) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 6

F34 Word in s. 684(7AA) substituted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(3)

F35 Words in s. 684(7C) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 7

Modifications etc. (not altering text)

C1 S. 684(2) modified (6.4.2007) by The Finance Act 2006 (Section 94(5)) (PAYE: Retrospective Notional Payments — Appointment of Substituted Date) Order 2007 (S.I. 2007/1081), art. 2; as provided for by 2006 c. 25, s. 94(5)

C2 S. 684(4A) applied by S.I. 2001/1004, Sch. 4 Pt. 3B para. 29X (as inserted (6.4.2012) by The Social Security (Contributions) (Amendment No. 3) Regulations 2012 (S.I. 2012/821), regs. 1(1), 18)

685 Tax tables U.K.

(1) [F1 The Commissioners F36 ...] must construct tax tables with a view to securing that so far as possible—

(a) the total income tax payable in respect of PAYE income for any tax year [F37 and any relevant debts payable during that tax year are] deducted from PAYE income paid during that year, and

(b) the income tax [F38 and any relevant debts] deductible or repayable on the occasion of any payment of, or on account of, PAYE income [F39 are such] that the following proportions are the same—

(i) the proportion which the total net income tax [F40 and any relevant debts] deducted since the beginning of the tax year bears to the total income tax [F41 and the total amount of any relevant debts] payable for the year, and

(ii) the proportion which the part of the tax year which ends with the date of the payment bears to the whole year.

(2) References in subsection (1) to the total income tax payable for the year are to be read as references to the total income tax estimated to be payable for the year in respect of the income in question—

(a) subject to a provisional deduction for allowances and reliefs, and

[F42 (b) subject to an adjustment in respect of amounts required to be deducted or repaid by PAYE regulations made under item 1A[F43 , 2 [F44 , 2ZA] or 2A] in the list in section 684(2).]

(3) For the purpose of estimating the total income tax payable as mentioned in subsection (1)(a), it may be assumed, in relation to any payment of, or on account of, PAYE income, that the following proportions will be the same—

(a) the proportion which the income paid in the part of the tax year which ends with the making of the payment bears to the income for the whole year, and

(b) the proportion which that part of the tax year bears to the whole year.

[F45 (4) PAYE regulations may make provision, where it appears to [F16 an officer of Revenue and Customs] that it is impracticable for a payer to deduct tax by reference to tax tables—

(a) for deductions to be made by the payer in accordance with other arrangements agreed as mentioned in section 684(7A)(a), or

(b) for the payee to be required to keep records and make payments and returns as if he were the payer.]

Textual Amendments

F1 Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(2); S.I. 2005/1126, art. 2(2)(h)

F16 Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(1); S.I. 2005/1126, art. 2(2)(h)

F36 Words in s. 685(1) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), Sch. 58 para. 9(3)(a)

F37 Words in s. 685(1)(a) substituted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(4)

F38 Words in s. 685(1)(b) inserted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(5)(a)

F39 Words in s. 685(1)(b) substituted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(5)(b)

F40 Words in s. 685(1)(b)(i) inserted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(5)(c)(i)

F41 Words in s. 685(1)(b)(i) inserted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(5)(c)(ii)

F42 S. 685(2)(b) substituted (10.7.2003) by Finance Act 2003 (c. 14), s. 145(3)

F43 Words in s. 685(2)(b) substituted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 58 para. 9(3)(b)

F44 Word in s. 685(2)(b) inserted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2012 (c. 14), Sch. 1 para. 5(5)

F45 S. 685(4) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 145(4)

686 Meaning of “payment” U.K.

(1) For the purposes of PAYE regulations, a payment of, or on account of, PAYE income of a person is treated as made at the earliest of the following times—

Rule 1

The time when the payment is made.

Rule 2

The time when the person becomes entitled to the payment.

Rule 3

If the person is a director of a company and the income is income from employment with the company (whether or not as director), whichever is the earliest of—

(a) the time when sums on account of the income are credited in the company’s accounts or records (whether or not there is any restriction on the right to draw the sums);

(b) if the amount of the income for a period is determined before the period ends, the time when the period ends;

(c) if the amount of the income for a period is not determined until after the period has ended, the time when the amount is determined.

[F46 But this is subject to subsection (5) (PAYE pension income: social security pension lump sums).]

(2) Rule 3 applies if the person is a director of the company at any time in the tax year in which the time mentioned falls.

(3) In this section “director” means—

(a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or body,

(b) in relation to a company whose affairs are managed by a single director or other person, that director or person, and

(c) in relation to a company whose affairs are managed by the members themselves, a member of the company,

and includes any person in accordance with whose directions or instructions the company’s directors (as defined above) are accustomed to act.

(4) For the purposes of subsection (3) a person is not regarded as a person in accordance with whose directions or instructions the company’s directors are accustomed to act merely because the directors act on advice given by that person in a professional capacity.

[F47 (5) For the purposes of PAYE regulations, a payment of, or on account of, an amount which is PAYE pension income of a person by virtue of section 683(3A) (social security pension lump sums) is to be treated as made at the time when the payment is made.]

Textual Amendments

F46 Words in s. 686(1) inserted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 10(5)

F47 S. 686(5) inserted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 10(6)