Coding out debts deadline
New legislation recently came into effect that will allow for a significant increase in the coding threshold for taxpayers. From 2015-16, the amount of debt that can be coded out in a year increases from £3,000 to £17,000 based on a graduated scale. The maximum coding out allowance will only apply to taxpayers with earnings exceeding £90,000.
The full breakdown is copied below:
Earnings | Coding out limit |
Less than £30k | £3k |
£30k to £39,999.99 | £5k |
£40k to £49,999.99 | £7k |
£50k to £59,999.99 | £9k |
£60k to £69,999.99 | £11k |
£70k to £79,999.99 | £13k |
£80k to £89,999.99 | £15k |
£90k or more | £17k |
Using coding out allows taxpayers to have an underpayment collected via their tax code, provided they are in employment or in receipt of a UK-based pension. The coding applies to certain debts such as Self Assessment liabilities, tax credit overpayments and outstanding Class 2 NIC contributions. Instead of paying off debts in a lump sum, money is collected in monthly instalments over a year.
Taxpayers with underpayments in the tax year 2013-14 have until 30 December 2014 (as opposed to the normal 31 January deadline for electronic returns) to file their Self Assessment returns in order to have the monies collected in the 2015-16 tax year starting on 6 April 2015.