PART 2CODES
Determination of code
Flat rate codesI115
F2A1
HMRC may determine that the code for use by an employer in respect of an employee for a tax year is the additional rate code, if they have reason to believe that the employee will be chargeable at the additional rate on all or a substantial part of the employee’s relevant payments.
1
The Inland Revenue may determine that the code for use by an employer in respect of an employee for a tax year is the higher rate code, if they have reason to believe that the employee will be chargeable at the higher rate on all or a substantial part of the employee’s relevant payments.
2
The Inland Revenue may determine that the code for use by an employer in respect of an employee for a tax year is the basic rate code, if they have reason to believe that the employee will be chargeable at the basic rate on all or a substantial part of the employee’s relevant payments.
3
The Inland Revenue may determine that the code for use by an employer in respect of an employee for a tax year is the nil tax code, if—
a
the employee’s PAYE income will be taken into account as taxable income other than PAYE income in any assessment,
b
the Inland Revenue are not satisfied that the employee’s income will be chargeable, or
c
the Inland Revenue have reason to believe that the employee will be entitled to a deduction under Chapter 6 of Part 5 of ITEPA (deductions from seafarers' earnings) in respect of the employee’s PAYE income or so much of it as remains after any deductions under F1sections 188 to 195 of the Finance Act 2004 (members' contributions).
4
References in this regulation to an employee’s relevant payments, PAYE income and income are references to the payments or income in respect of which the employee’s code is being determined for the purposes of the employment in question.