HMRC considers coding out limits increase

A consultation on increasing the size of PAYE underpayment, Self Assessment (SA) balancing payment or unpaid debt that the Revenue can recover in this way – known as coding out – will run until 5 September 2013.

Currently, there is a limit of £3,000 for coding out, set in 2011, to strike a balance between allowing HMRC to recover debts, while protecting lower earners. However, the tax department is now proposing a “more fair” staggered scale of limits.

Debts above £3000, typically from high earners are often excluded from coding out as they exceed the limit that can be deducted, leaving HMRC dependent on more expensive methods to pursue the outstanding amounts.

Under the proposals being considered anyone earning less than £30,000 will not have more than £3,000 debt collected through PAYE rising to £17,000 for those earning more than £90,000. If you have a concern you would like to raise with HMRC, correspondence should be sent by 5 September by email to or to:

HMRC, Coding Out Consultation, Tax Administration Policy Team, Room 1/C06, 100 Parliament Street, London SW1A 2BQ

Nick Day, Managing Director of JGA Recruitment comments “Coding out always needs to be handled with care as it’s usually the individual responsible for payroll who gets grief from the employee for deducting tax even though they are entitled to do so.”