§ Mr. DewarTo ask the Chancellor of the Exchequer what allowances will be taken into account when the Benefits Agency issues a tax code and deducts tax at source from someone liable to pay tax but whose only income is incapacity benefit. [19279]
§ Sir George YoungInitial tax codes allocated by the Benefits Agency to new claimants of incapacity benefit will take account of entitlement to the basic personal tax allowance and, depending on information supplied by the individual on the incapacity benefit claim form, the married couple's allowance and blind person's allowance. In most cases, that initial code is likely to be the correct one. However, in some cases a new tax code may be issued soon afterwards by the Inland Revenue where further information comes to light after checking its records. That subsequent code—selected from the limited number of further codes available—may take account, where relevant, of entitlement to other allowances.
§ Mr. DewarTo ask the Chancellor of the Exchequer if he will set out the procedures for reclaiming an overpayment of tax in cases where deductions have been made at source by the Benefits Agency as a result of the decision to tax incapacity benefit. [19280]
§ Sir George YoungWhere deductions of tax from incapacity benefit have been made at source by the Benefits Agency, any overpayment of tax which arises will automatically be refunded by the Inland Revenue at the end of the tax year or when the claim to incapacity benefit ceases, whichever is the sooner. Alternatively, taxpayers can claim a repayment during the tax year from the Inland Revenue. In addition, from October, any overpayments which arise because too much tax has been deducted by the Benefits Agency will be remedied automatically under the pay-as-you-earn system operated by the Benefits Agency.