Chapter PAYE46100

CourtHM Revenue & Customs
Record NumberPAYE46100
Published date13 April 2016

This subject consists of the following

Background

In October 1999 the Government introduced the following tax credits which replaced the social security benefits Family Credit and Disability Working Allowance

  • Working Families Tax Credit (WFTC)

And

  • Disabled Person’s Tax Credit (DPTC)

At the same time, it was also decided that the Family Credit Unit would become an HMRC Executive Office known as the Tax Credit Office (TCO). They would be responsible for the administration of the Tax Credit Service (TCS).

From April 2000 a change was made to legislation so that the normal method of payment of tax credits for employees would be through the employer as part of the PAYE process.

In April 2003 WFTC and DPTC were replaced by Working Tax Credit.

From April 2006 a change was made to legislation so that the method of payment of all tax credits would be direct to the taxpayer.

Note: If an employer tells you that they have paid Working Tax Credit after 31 March 2006 and / or has carried forward Tax Credit Funding into 2006-07, you should advise the employer to contact the Employer Helpline on 0300 200 3200 (text phone 0300 200 3212).

The following provides information about the operation of the Tax Credit System prior to 31 March 2006.

Computer Systems

The Tax Credit System (TCS) (via user role ‘TCS View ECU’) and the New Tax Credit (NTC) (via user role ‘EFBS Maintainer’) are available to staff on Employer units to view

  • Tax credits authorised for an employer

And

  • Tax credit funding details

Notes:

  1. The self-employed continued to get their payments direct, contractors were not required to pay out tax credits.

  2. Employer who operate certain scheme types were not required to deal with the payment of tax credits

DCNI

DOME

DPGEN

DPNI

ELECT

EPA

EXAM

NORPRO

PSS

TAS

TRONC

XP

And from April 2003

OCPN

Tax Credit Office advised the employer of the amount of tax credits to be paid for the period of a claim and when payment was to commence and cease to be paid via the employer.

Payment of Tax Credits via the employer was phased out during the period November 2006 to 31 March 2006.

Tax credit funding

The employer was able to set-off tax credits paid out against the tax, NIC and Student Loan deductions due to HMRC each month or quarter.

The tax credits an employer was due to pay may exceed the tax, NIC and Student Loan Deductions due to HMRC. Where this arose the employer could apply for funding either in writing or by telephone to Banking Operations.

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