Coding out debts deadline
11/11/2020

The coding threshold entitles tax payers to have tax underpayments collected via a tax code, provided they are in employment or in receipt of a UK-based pension. The coding applies to certain debts such as Self-Assessment liabilities, tax credit overpayments and outstanding Class 2 NIC contributions.

Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.

The amount of debt that can be coded out ranges from £3,000 to £17,000 based on a graduated scale. This is a different limit to that for paying your Self-Assessment bill where the amount owed must be less than £3,000. The maximum coding out allowance only applies to taxpayers with earnings exceeding £90,000. 

The full breakdown is as follows:

Earnings     Coding out limit
Less than £30k £3k
£30k to £39,999.99 £5k
£40k to £49,999.99 £7k
£50k to £59,999.99 £9k
£60k to £69,999.99 £11k
£70k to £79,999.99   £13k
£80k to £89,999.99 £15k
£90k or more £17k

If you had tax underpayments in the 2019-20 tax year you have until 30 December 2020 to file your Self-Assessment returns in order to have the monies collected in the 2021-22 tax year starting on 6 April 2021.


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