New 0T PAYE code for payments to former employees to apply to share awards

From 6 April 2012, employers delivering shares to employees after form P45 has been issued  willneed to operate PAYE using the new 0T code, which deducts tax at the basic, higher and additionalrates, according to the amounts concerned.  The 0T code has applied to cash payments made toleavers since 6 April 2011 and it is now intended to bring remuneration delivered in shares (forinstance, to "good leavers" who retain awards under share plans) into the same regime.

This may have cashflow consequences for leavers, and in some circumstances, a loss of the growth invalue on excess shares sold to fund PAYE– for example, by "good leavers" under share awards whowish to “sell to cover”.

The full legal update is available to download as a PDF.