New job has been overpaying me

[UltimateChaos]

Hi, I realized last week that my new job (been there a few months now) has been overpaying me, I didn’t even notice as I was actually receiving around the correct amount into my account. I get paid weekly. The overpayment was being swallowed by my emergency tax code, NI, student loan and pension contributions. I didn’t even think anything of it because the “net” amount that I was receiving was basically what I was expecting.

Well I actually had a look atnone of my payslips properly last week and did some calculations to see whether we could afford a holiday and
the numbers didn’t make sense, of course I queried it with my boss. ThIs was a few days ago now.

Well I found out yesterday that yeah, I am being overpaid. I wil have to pay the money back (fair enough) but that they wouldn’t expect it all back in one go. This was just an informal chat so I assume I will have to have a meeting about what went wrong, how much I actually owe and repayment terms etc.... I just don’t want to go in without knowing my rights.

I am fully prepared and happy to pay the money back, it’s just that I never actually received any overpayment myself. As I said, the taxman too a large majority because I was/still am on an emergency tax code, my NI contributions were obviously higher due to the larger wage, I ended uo paying my student loan which I shouldn’t have been doing as I should have been under the £25000 bracket (this admin error made my wage higher than that) and obviously the rest went into my pension.

So what can they realistically make me pay? If they want the gross amount then I am down about 2k, as I will be paying back money that I actually never got into my bank account and which they paid in error to NI, student loan and pension (I understand I can claim tax back). That doesn’t really seem fair to me. Inkmow I will owe less on my student loan and have more in my pension pot etc but that doesn’t exactly help me financial situation now, you know?

If I pay back the net amount then then we are basically square. However they will still be the money down from the student loan and pensions etc. Can they claim all of that stuff back themselves? It would be a total nuisance for them to expect me to try and wrangle money from all these other parties so that I can pay them back to fix their mistake for them.

What should I agree to? I can’t afford to be out of pocket right now, increasing my income was the sole reason I took this job.

I would note down in an excel doc exactly how much went to each of the pension, NI, student loan, emergency tax rate and how much you actually received net in your salary.

Tell them that you are willing to pay the net extra amount you received in your salary, but that it is up to them to get the money that went to the pension, NI, student loan, emergency tax rate themselves.

That’s a rotten situation. I would expect them to fix all the things that went wrong or gift me the money tbh. But I don’t know if that’s the legal situation and I don’t think you will get reliable advice on your legal situation on AIBU. Do you have any access to legal advice (Union membership, home insurance?), failing that may be ACAS or similar?

ShumpaLumpa That is a good idea, I have a basic understanding that after tax and NI (if I was on the correct wage and missing out student loan and pension) I should have netted £370 a week.

Even though I have been out on an annual wage 5k over ehat it should have been, I have only netted £380 a week.

So only received a tenner more a week for the last 4 months, which I am perfectly happy to pay back!

The rest is

Student Loan - £144
Tax overpay - £1120
NI overpay - £205
Pension overpay - £80

Which I am a bit more dubious about... I feel like if they want it back then they should get it back from those parties and not ask me to pay it back and leave me trying to reclaim it myself (potentially unsuccessfully and thud leaving me out of pocket in the present time).

I am not a union member or anything, I feel like I am in the right by refusing to pay back 2k when I only received about £160 extra. I just wated to make sure that I don’t go into this meeting with my new work all guns a-blazing if I was wrong.

Won't you get the tax overpayment back at the end of The tax year though?

If you will be under the student loan threshold for the year you can apply to get that back - simple form

Tax - can be adjusted once code is fixed and so that will even out over the year

NI - probably can't do anything about that, likewise pension.

You can ask to repay over extended period though - your company should have a policy about this, often its 12 months...

I would expect the company to calculate the amount you should have received each month (i.e recalculated on the lower gross salary) but with the same emergency tax code. Tax codes are cumulative throughout the tax year so you will get overpaid tax back through payroll.

Potentially, but I very much doubt work will let me wait until April to pay it back, so it would literally be be stumping up close to 2 grand now for their mistake and being 2k out of pocket for over half a year. That is providing I can claim back money that got put into Student loan, NI and my pension.

I know 2 grand isn’t a lot to some people, but that is a massive amount of money to me.

You need to sort the tax situation ASAP as this is your responsibility- to pass a P45 to payroll or call HMRC to get the tax code corrected, get on the phone now. Same with student loans. Your employer should be reasonable and arrange a suitable payback. And when you get the tax rebate you can pay a bigger lump. In the past I’ve arranged monthly deductions from pay so it didn’t impact so much. That was a similar sum without the added overtaxing.

I would ask them to recover a set amount through payroll over several months, and that way the tax, Ni etc should straighten itself out. So have the correct gross amount eg £1K, less say £50 so that the amount taxable is £950 ........that way the tax and NI should unwind itself assuming you are on a cumulative tax code.

That way by the end of the tax year, the gross should be the amount that you should have received. If you are on a non cumulative code, I would ring HMRC for advice

You should get the rebate in the next salary payment once resolved with hmrc. Call now.

Usually repayment terms are agreed - say repay £100 a month before any deductions / contributions.

£2k over a few months is quite a lot. I think most people would have noticed sooner - your payslip should show a basic amount, in your case the student loan deduction and then your tax, NI and pension deductions. Also doesn't anybody in your company compare expenditure vs budget? It's not very good that it was you who brought it to their attention!

I emailed a copy of my P45 to payroll the day after I discovered I was on the wrong tax code, that was Monday and I haven’t heard anything as of yet. We dont have a HR or payroll department in site, its a large international company.

I suppose if I come out of my pension for a few months then the hit won’t be so bad.

So if they reduce my gross pay by say, £100 and sort my tax code out then I will pay massively reduced tax for the next few months as I have paid more tax already than I should have done all year? So it might all kind of even out?

You are not liable for their error.
Tax and NI are paid quarterly to HMRC, so they will have to rerun your payroll since you started on the correct salary, then make adjustments to their payroll. If they don't do this they may have issues if they are audited, so rebalancing your tax and NI should be done by your work.
The loan is the only thing you may have issues with - I've got an older style loan and if you make any repayments you can't defer until the following year and must keep paying, they will not accept it if you have not deferred for any reason at all. As yours is being paid directly by your company they should really accept liability and if they won't give back the money your company paid in error I would argue that it's their loss rather than yours as it was their mistake.
All you should have to pay back is overpaid net salary - this is all their mistake.

You'll get it back as a tax rebate.

Are you still on emergency tax, or have HMRC issued you with a tax code? If you've got a tax code, you may get the overpaid tax back in your pay, or you may have to wait until the end of the tax year in April.

If you haven't got a tax code that starts with a number (I think it's currently 118 for most people) ring the HMRC employee helpline and ask them to issue you the code and issue you with a new one if it's wrong. I'm assuming that you're on code BR at present, which means you're paying 20% of all you earn.

NI is a bit trickier, because it's calculated according to how much you earn in a given week. It's not annualised like tax is.

No idea about the pension and student loan though.

When's your meeting? My DP is a payroll manager and will know the answer to all this, but he won't be home until about 7.

It's a bad cock-up on the part of the employer, and in the circumstances it would be fair of them to deduct the overpayment in instalments, but I don't think you can demand that. It might put their backs up and after 4 months you have no employment rights!

I'd play the sympathy card and explain that it will cause you tremendous financial hardship, especially as they have caused you to pay a wodge of student loan and pension (and possibly NI) that you shouldn't have had to pay at all, and you may not be able to get those back.

The tax overpayment will get sorted eventually, and you might be able to persuade them to wait until your tax refund comes through and take some of the repayment from that.

I am on the tax code 0T W1, I only noticed the wage discrepancy when I noticed I was paying my student loan which I shouldn’t have earned enough to have to pay back yet.

LakieLady My meeting isn’t until next week so that would be really amazing if you could get your DH input on this situation! Thank you!

I wish I had put 2 and 2 together sooner, but I genuinely assume it was right because I was receiving around the correct amount into my bank account. I should have checked my payslips properly but I stupidly assumed that a large corporation would be pretty adept at this sort of thing so no need to question. It was only when I multipled my gross weekly wage by 52 that alarm bells went off in my head. I spoke to my manager about it the very next day.

Seen your update now, which sorts of muddies the waters a bit. The tax overpayment is partly your fault, for not handing in your P45 when you started. Once that is processed, the tax situation should right itself.

Call hmrc. It’s happened to me before and I got the payment back the next month. They are actually very easy to deal with on the phone.

What was the tax code on your P45? OTW1 is what employers have to use when they have no other info. It means you pay 20% of everything you earn in tax, every week. On 1185L, you don't pay tax on the first £288 a week (or thereabouts).

I think you need to separate the overpaid salary from the overpaid tax in your mind, ifkwim. They are kind of separate, as you would have overpaid tax even if you'd been on the right pay.

But I will speak to DP tonight. Are you weekly or monthly paid? OTW1 would suggest weekly, but it's not always the case!

My tax code on my P45 was 1150L.

That’s true LakieLady I guess they are two seperate issue, do you think I ring up HMRC today and get the tax code sorted or should I leave it to payroll as I have already emailed them my P45? Hopefully I can get the rebate quickly and then pay off work some of the work debt with that or they might agree to deduct from my pay and then the tax will self-right itself.

I get paid weekly, this has all been one big mess.

Speak to HMRC directly and sort out your tax position yourself. These days they are very approachable and helpful. Don't rely on your employer fixing it via your P45. It's your tax code, your overpayment and it'll be better for your peace of mind to sort this piece out. Good luck.

your P45 is from last tax year is that correct? if so it will make no difference to the 2018-19 tax (from April this year)

You need to speak to HMRC first of all to ensure your coding is correct, they will then notify your employer. The employer will want the gross amount back, as far as they are concerned this is how much you have been overpaid, they are not to know where that has gone after they have overpaid it to you.

Going forward your reduced income will reflect with tax and you will receive a refund of the overpayment of PAYE tax in your coming couple of payslips, ask to put the pension on hold for a month or 2 to recoup the money from that, the student loan can be refunded back to you once, at the end of the tax year, they see your income is under the threshold for deductions. NI, as a pp said is more difficult as its based on weekly gross income, you may not get this back. It is both your own responsibility and theirs to ensure your pay is correct.

This is your employers fault, the NI paid would not be refunded as it is calculated week to week and not cumulative, however once your next pay is processed the lower amount should trigger a tax rebate in payroll which you should arrange for payroll to deduct the difference between this and your normal weekly pay amount and put it against the amount you owe them.

I would expect you will need to point out to them that while you are happy to refund any monies you received in error, what they paid out in their own error was not really fair to hold you accountable for.

Along side this, there is no reason why HMRC should not return your Tax code to the normal one after a phone call from you.

I had similar with my pay after.ret7rning from maternity leave. I basically got paid £90 for December (great time for Christmas). Grumpy payroll huffed and puffed that she hadn't been informed I had used leave that month so should have had full salary approx £1200. Until my manager provided an email she had sent them. Cue my next pay being doubled and I got hit with significantly larger tax, NI, pension and student loan. Payroll again argued that it was all right and I would have paid it regardless. But I worked it out myself and I had ended up £500 out of pocket overall. It took 2 months but eventually they conceded that I shouldn't have been out of pocket for their mistake. The tax I had to wait for, but they refunded the NI, student loan and pension.

Don't just trust their numbers do your own calculations and ask to see how they worked it out.

Good luck.