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HMRC have explained how they will deal with taxpayers who are liable to the 50% rate of income tax in 2010/11 but who have not had enough tax deducted.
In an update provided to professional bodies, the Revenue said, ‘From the 2010/11 tax year, UK taxpayers – including employees, directors and pensioners with taxable income of more than £150,000 – are liable to tax at 50%.
‘If these individuals have only one source of employment income, the right amount of tax is already being deducted from their salary/pension through the normal operation of the PAYE tax tables and payroll software that is used by employers and pension providers.
‘However, if they have two or more such employments then an underpayment is likely to arise when their 2010/11 self assessment tax return is processed. This underpayment will arise because although the new rate started from 6 April 2010, tax codes issued for 2010/11 do not take account of the 50% rate.
‘This is because HMRC were unable to introduce the changes needed to the National Insurance and PAYE service when the start date for the new rate was brought forward a year to April 2010 by Budget 2009.
‘HMRC are currently undertaking an exercise to identify those customers [sic] who might be affected by this problem (which applies only to 2010/11).
'Customers [sic] will be given as much notice as possible in writing, to enable them to arrange their finances to cover any underpaid tax that will be due on 31 January 2012
‘Those customers [sic] not currently within self assessment will be registered and allocated a unique taxpayer reference before being issued with a 2010/11 “notice to file” a self assessment tax return in April 2011.
‘From 2011/12, tax codes will be issued to fully reflect the 50% rate, ensuring that the correct rate of tax will be collected from all jobs or pensions for an individual, regardless of how many sources of income that person has.’
