If an employee (or his authorised representative) so requests, an employer must repay any income tax due to an employee who is on a cumulative tax code and is on unpaid leave (SI 2003/2682, reg. 63). In other words, the employer must operate PAYE on the normal pay day as if a nil payment had been made, thus generating a tax repayment. The employer must then complete a deductions working sheet in the usual way.

The above rule does not apply if the employee is absent from work due to participation in a trade dispute (see ¶494-330).

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