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Arrears of pay in previous tax years (UK Payroll)

Former Member
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Under HMRC regulations, where arrears of pay that were due in previous tax years are paid, the tax codes applicable at the time the money was due are to be used (rather than in the month the money is paid). This is not how SAP works as standard, it applies the tax codes applicable at the time the payment is made. We have to go back over three years. Has anyone experience of this situation and, if so, how did you make this happen?

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Answers (1)

jayantvenkata
Product and Topic Expert
Product and Topic Expert
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Hello

With the RTI put in place, the tax code to be taken for any payment done to the leaver employee would be as follows:-

P45 issued, system will consider the tax code as OT/M1, and the period in which payment is done will be considered.

P45 not issued, system will consider the tax code as basis as on date of leaving, and  the period in which the employee is  a leaver.

Prior to RTI, this was controlled thru the P45 being issued or not and feature GLTXC.

P45 issued, system will consider the tax code as OT/M1, and the period in which payment is done will be considered.

P45 not issued, feature GLTXC can be used for determining whether late payments made to

people who have already left employment but not yet been issued with a P45 form,  should be taxed at the existing tax code from their period of employment or whether they should be made using the basic rate of tax 'BR'.

Either one of two possible values are returned:

Space   - use the person's existing tax code

'X' - use the tax code BR

Hope this information helps.

Thanks and Kind Regards

Ramana