We have heard that the Taxman has almost finished sorting out the mess his new computer made out of the 2010/11 PAYE codes. If you have not received a P2 form for your employees that gives their PAYE code for 2010/11, carry on using the PAYE code issued for 2009/10. You should shortly receive the updated P2 forms for 2010/11.

One of the problems with the PAYE codes occurs where an individual starts to receive an occupational pension, or that pension is paid by a different pension provider, perhaps due to a restructuring of companies.

In such cases the pension provider should send a form P46(pen) to the Tax Office. However, the Taxman has said that many of these P46(pen) forms contain mistakes, and this is causing the PAYE computer to churn out crazy codes, or send out unnecessary forms P161 to the pensioner. If you need to tell the Tax Office that you have started paying a pension to a former employee, please ask us to check the P46(pen) form first.