The HMRC can currently collect debts up to £3000 by adjusting tax codes this scheme is known as ’Coding Out’.
However due to changes in the law the amount of debts the HMRC can collect using this method has increased. This can apply to you if you have a debt with HMRC and are an employee paying tax through PAYE or receive a taxable UK based private pension.
These changes will only apply to underpaid self-assessment and class 2 national insurance debts as well as tax credit overpayments. Changes will become effective in your 2015-16 tax code and you will receive a letter before any debts are collected in this way.
The Sliding income scale is as follows:
| Annual PAYE Earnings | Coding Out Limits |
| Up to £29999.99 | £3000 |
| £30,000 -£39,999.99 | £5000 |
| £40,000-£49,999.99 | £7000 |
| £50,000-£59,999.99 | £9000 |
| £60,000-£69,999.99 | £11000 |
| £70,000-£79,999.99 | £13000 |
| £80,000-£89,999.99 | £15000 |
| £90,000 | £17000 |
If you don’t want the debts to be included in your tax code then you will need to pay the full amount you owe or discuss with HMRC a more suitable payment arrangement.
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