Coding out small debts of up to £3000

From April 2012 HMRC to collect all tax debts through PAYE provided the debtor is in employment or in receipt of a UK-based pension. HMRC will be able to collect small self-assessment debts and tax credit overpayment of up to £3000 through the taxpayer’s PAYE code. This will be described on the coding notice as “outstanding debt”.
HMRC will send you a letter telling you that they intend to try to recover the money owed in this way and you will be sent a PAYE Coding Notice between January and March immediately before the start of the tax year on 6 April to say that your tax code includes the collection of the outstanding debt.
Collection through PAYE is at HMRC’s option, although tax credit claimants have the opportunity to object to their overpayment being collected in this way. If you do not wish to have a debt collected through your tax code then contact should be made with HMRC so that an alternative payment method can be agreed.
If you would like any further information please feel free to contact the team on 01733 371180.

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