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Tax-debt recovery based on graduated scale
| Annual earnings (£) | Coding-out limit (£) |
| Less than 30,000 | 3,000 |
| 30,000 – 39,999.99 | 5,000 |
| 40,000 – 49,999.99 | 7,000 |
| 50,000 – 59,999.99 | 9,000 |
| 60,000 – 69,999.99 | 11,000 |
| 70,000 – 79,999.99 | 13,000 |
| 80,000 – 89,999.99 | 15,000 |
| More than 90,000 | 17,000 |
Rules allowing for the coding-out limit to be increased in respect of tax debt have been published. They are the Income Tax (PAYE) (Amendment No 4) Regulations 2014 (SI 2014 No 2689).
As announced in the 2013 Budget, the maximum amount HMRC may recover through a taxpayer’s PAYE notice of coding ranges from £3,000 to £17,000, depending on the expected earnings of the employee (see table).
The new graduated scale will apply for the 2015/16 tax year.
The changes will be applied to unpaid self assessment and class 2 National Insurance debts and tax credit overpayments.
The Revenue says it will notify taxpayers in advance of the amounts that will be deducted from April 2015, the same date from the start of the overriding limit to prevent employers from deducting more than 50% of worker’s pay.
