The Income Tax (Pay As You Earn) Regulations 2003

Interpretation U.K.

2.—(1) In these Regulations, unless the context otherwise requires—

“additional pay” means the appropriate amount, established from an employee’s code (where it is a K code not used on the cumulative basis) and the tax tables, to be added to the relevant payments made to an employee in order to determine the taxable payments;

[F1 “additional rate” in relation to the charging of income tax for any tax year, means the rate of income tax determined under section 6(2) of ITA;]

“agency” has the meaning given in section 44 of ITEPA;

“agency worker” means a worker whose services are treated by section 44 of ITEPA as the duties of an employment held with the agency;

“approved method of electronic communications” has the meaning given in regulation 189;

“basic rate”, in relation to the charging of income tax for any tax year, means the rate of income tax determined under section 1(2)(a) of ICTA(1);

“Board of Inland Revenue” means the Commissioners of Inland Revenue (as to which see in particular the Inland Revenue Regulation Act 1890(2));

[F2 “closed tax year” means any tax year preceding the current year, and cognate expressions shall be construed accordingly;]

“code” and related expressions have the meanings given in regulation 7;

[F3 “combined amount” means an amount which includes tax due under these regulations and one or more of the following—

(a)

earnings-related contributions due under the SSC Regulations;

(b)

amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005;

(c)

payments of repayments of student loans due under the Student Loan Regulations;]

“cumulative basis” means the basis of deduction or repayment of tax provided for in regulation 23;

“deductions working sheet” means—

(a)

any form of record in which are to be kept the matters required by these Regulations in connection with an employee’s relevant payments and tax;

(b)

in regulations 34 and 35 (simplified deduction scheme), and regulations 142 and 143 (direct collection) the form issued by the Inland Revenue for the purpose of keeping those records;

“earnings” has the meaning given in sections 62 and 721(7) of ITEPA;

“electronic communications” has the meaning given in regulation 189;

“employee’s code” has the meaning given in regulation 8(1);

“employer reference” means the combination of letters, numbers or both used by the Inland Revenue to identify an employer for the purposes of these Regulations;

“employer’s PAYE reference”, in relation to an employer, means the combination of the employer’s employer reference and the Inland Revenue office number;

“employment”, subject to regulations 10 to 12, has the meaning given in sections 4 and 5 of ITEPA; and “employer” and “employee” have corresponding meanings;

“excluded business expenses” has the meaning given in regulation 5;

“family” and “family or household”, in relation to a person, have the meanings given in section 721(4) and (5) of ITEPA;

“free pay” means the appropriate amount, established from an employee’s code (where not used on the cumulative basis) and the tax tables, to be subtracted from relevant payments to arrive at taxable payments (and accordingly represents an appropriate part of reliefs allowable against those payments);

“general earnings” has the meaning given in section 7(3) of ITEPA;

“higher rate”, in relation to the charging of income tax for any tax year, means the rate of income tax determined under section 1(2)(b) of ICTA(3);

[F2 “HMRC” means Her Majesty’s Revenue and Customs;]

“ICTA” means the Income and Corporation Taxes Act 1988(4);

“Inland Revenue” means any officer of the Board of Inland Revenue;

“Inland Revenue office”, in relation to an employer, means the office of the Inland Revenue from which codes are normally issued to the employer;

“Inland Revenue office number” means the number which identifies an employer’s Inland Revenue office;

[F3 “ITA” means the Income Tax Act 2007;]

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003(5);

[F4 “large employer” has the meaning given in regulation 198A;]

[F5 “lower earnings limit” means the lower earnings limit for Class 1 contributions for the purposes of section 5(1) of the Social Security Contributions and Benefits Act 1992;]

“national insurance number” means the national insurance number allocated within the meaning of regulation 9 of the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001(6);

“net PAYE income” has the meaning given in regulation 3;

“non-cumulative basis” means the basis of deduction of tax provided for in regulation 27;

[F6 “non-Real Time Information employer” means an employer other than one within regulation 2A;]

[F6 “non-Real Time Information pension payer” means a pension payer other than one within regulation 2B;]

[F7 “notice” means as follows and “notify” must be read accordingly—

(a)

notice in writing, or in a form authorised (in relation to the case in question) by directions under section 118 of the Finance Act 1998 (which allows certain claims etc to be made by telephone)

(b)

for the purpose of regulation 19 (Amendment of code), notice in writing or by telephone;”.]

“notional payment” has the meaning given in section 710(2)(a) of ITEPA;

“objects” means gives a notice of objection to the Inland Revenue;

“official computer system” has the meaning given in regulation 189;

“other payee” means a person receiving relevant payments in a capacity other than employee, agency worker or pensioner;

“other payer” means a person making relevant payments in a capacity other than employer, agency or pension payer;

“overriding limit” means the limit on the amount of tax to be deducted from a relevant payment, where the tax due in accordance with the appropriate tax tables in respect of any taxable payments or total taxable payments to date at the relevant date has been calculated by reference to additional pay or total additional pay to date, and that limit is an amount equal to 50% of the amount of the relevant payment;

“PAYE income” has the meaning given in section 683 of ITEPA;

“PAYE pension income” has the meaning given in section 683(3) of ITEPA;

“PAYE threshold” must be determined in accordance with regulation 9;

“payee” means an employee, agency worker, pensioner or other payee;

“payer” means an employer, agency, pension payer or other payer;

“pension” means a pension, annuity or other payments of PAYE pension income;

“pensioner” means a person receiving PAYE pension income;

“pension payer” means a person making payments of PAYE pension income;

“PSA” means a PAYE settlement agreement made in accordance with regulation 105;

“qualifying general earnings”, in relation to a PSA, has the meaning given in regulation 106;

[F2 “qualifying payment” means a payment which becomes retrospective employment income as a relevant payment (including a notional payment);]

[F6 “Real Time Information employer” has the meaning given in regulation 2A;]

[F6 “Real Time Information pension payer” has the meaning given in regulation 2B;]

“reckonable date” has the meaning given in regulation 82(8);

“relevant payments” has the meaning given in regulation 4;

“relevant pension payments” has the meaning given in regulation 6;

[F2 “the relevant time”, in relation to retrospective employment income, has the meaning given by section 710(7) of ITEPA, as modified by subsection (7A) of that section, but subject to section 94(5)(c) of the Finance Act 2006;]

“reliefs from income tax” includes allowances and deductions;

[F2 “retrospective contributions regulations” has the meaning given by regulation 1(2) of the SSC Regulations;]

[F2 “retrospective employment income” means payments which are retrospectively treated as payments of employment income by virtue of a retrospective tax provision;]

[F2 “retrospective tax provision” means a provision of the Income Tax Acts charging to income tax amounts of employment income paid before the enactment containing the provision was passed;]

[F5 “seconded expatriate” means an employee meeting one of the following descriptions—

(a)

an employee in section 689 of ITEPA (employee of non-UK employer); or

(b)

an employee in a branch of an employer where—

(i)

these Regulations would not apply to that employer but for that branch,

(ii)

the employer seconded the employee to that branch, and

(iii)

the employee was not employed in the United Kingdom immediately before the secondment;]

[F8 “specified date” for the purposes of Chapter 3 of Part 10, has the meaning given in regulation 198A;]

[F2 “SSC Regulations” means the Social Security (Contributions) Regulations 2001;]

F9 ...

[F10 “Student Loan Regulations” means the Education (Student Loans) (Repayment) Regulations 2009 or, in Northern Ireland, the Education (Student Loans) (Repayment) Regulations (Northern Ireland) 2009;]

“taxable payments” means relevant payments reduced by free pay or, as the case may be, increased by additional pay (where the employee’s code is not used on the cumulative basis);

“tax month” means the period beginning on the 6th day of a calendar month and ending on the 5th day of the following calendar month;

“tax not deducted because of the overriding limit” means any tax—

(a)

which is due at the relevant date in accordance with the appropriate tax tables in respect of any taxable payments or total taxable payments to date, but

(b)

which has not been deducted because of the overriding limit;

“tax period” means—

(a)

tax quarter, if regulation 34 (simplified deduction scheme for personal employees) or regulation 70 (quarterly tax periods) applies, or

(b)

tax month, in every other case;

“tax quarter” means any of the following (inclusive) periods—

• 6th April to 5th July,

• 6th July to 5th October,

• 6th October to 5th January, and

• 6th January to 5th April;

“tax tables” means the tax tables prepared by the Board of Inland Revenue under section 685 of ITEPA(7);

“tax week” means 6th April to 12th April (inclusive) and each successive period of 7 days, except that the final tax week in a tax year (“Week 53”) is just the last day of the tax year (or last 2 days in a leap year);

“tax year” means a year for which any Act provides for income tax to be charged;

“TMA” means the Taxes Management Act 1970(8);

“total additional pay to date” means the appropriate amount, established from an employee’s code (where it is a K code to be used on the cumulative basis) and the tax tables, to be added to the total payments to date in order to determine the total taxable payments to date;

“total free pay to date”, in relation to any date, means the appropriate amount, established from an employee’s code (where used on the cumulative basis) and the tax tables, to be subtracted from total payments to date to arrive at total taxable payments to date (and accordingly represents an appropriate part of reliefs allowable against those payments);

“total net tax deducted”, in relation to the relevant payments made to an employee during any period, means the total tax deducted from those payments plus any tax accounted for in accordance with regulation 62(5) (notional payments), less any tax repaid to the employee;

“total payments to date”, in relation to any date, means the sum of all relevant payments made by the employer to the employee from the beginning of the tax year up to and including that date;

“total tax to date” means the tax due at any date in accordance with the appropriate tax tables in respect of any total taxable payments to date;

“total taxable payments to date” means total payments to date reduced by total free pay to date or, as the case may be, increased by total additional pay to date (where the employee’s code is used on the cumulative basis);

“trade dispute” has the meaning given in section 35(1) of the Jobseekers Act 1995(9) or, in Northern Ireland, in article 2(2) of the Jobseekers (Northern Ireland) Order 1995(10).

[F11 “tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.]

(2) References in these Regulations to income tax in respect of PAYE income (however expressed) are references to income tax in respect of that income if reasonable assumptions are, when necessary, made about other income.

Textual Amendments

F1 Words in reg. 2 inserted (6.4.2011) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2011 (S.I. 2011/729), regs. 1, 3(a)

F2 Words in reg. 2(1) inserted (6.4.2007) by The Income Tax (Pay as You Earn) (Amendment) Regulations 2007 (S.I. 2007/1077), regs. 1, 3

F3 Words in reg. 2(1) inserted (6.4.2008) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2008 (S.I. 2008/782), regs. 1, 3(a)

F4 Words in reg. 2(1) substituted (6.4.2011 in relation to the tax year 2011-12 and subsequent tax years) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2010 (S.I. 2010/668), regs. 1(3), 15(a)

F5 Words in reg. 2(1) inserted (6.4.2012) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2012 (S.I. 2012/822), regs. 1(1), 60(a)

F6 Words in reg. 2(1) inserted (6.4.2012) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2012 (S.I. 2012/822), regs. 1(1), 3

F7 Words in reg. 2 substituted (6.4.2011) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2011 (S.I. 2011/729), regs. 1, 3(b)

F8 Words in reg. 2(1) substituted (6.4.2011 in relation to the tax year 2011-12 and subsequent tax years) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2010 (S.I. 2010/668), regs. 1(4), 15(b)

F9 Words in reg. 2(1) omitted (6.4.2008) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2008 (S.I. 2008/782), regs. 1, 3(b)

F10 Words in reg. 2(1) substituted (6.4.2012) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2012 (S.I. 2012/822), regs. 1(1), 60(b)

F11 Words in reg. 2(1) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 2 para. 93

Commencement Information

I1 Reg. 2 in force at 6.4.2004, see reg. 1

(1)

Section 1(2)(a) was amended by section 9(3) of the Finance Act 1992 (c. 20).

(2)

1890 c. 21.

(3)

Section 1(2)(b) was substituted by section 24(2) of the Finance Act 1988 (c. 39).

(4)

1988 c. 1.

(5)

2003 c. 1. The Income Tax (Earnings and Pensions) Act 2003 is referred to in these footnotes as “ITEPA”.

(6)

S.I. 2001/769.

(7)

Section 685 was amended by section 145(3) and (4) of the Finance Act 2003.

(8)

1970 c. 9.

(9)

1995 c. 18.

(10)

S.I. 1995/ 2705 (N.I. 15).