Confused about PAYE

[BeingGivenMoney]

I left my place of employment at the end of August and am currently not working.

In September I had £211 debited to my bank account from my employers which I assumed to be backdated over time pay or something so I didn’t really pay attention to it.

However, the same has happened in October which was only realised when our bank statement came through the post yesterday.

Coincidentally I had what is effectively a payslip come through the post this morning from my ex-employer and the £211 that was paid to me in September and October is listed as a PAYE payment.

But I’m confused as I thought PAYE was a deduction? Not a credit?! And I’m even more confused seeing as I don’t even work there anymore.

I have been googling for ages trying to find an explanation but to no avail so I was hoping somebody wise on here would be able to explain it to me?

I’m assuming it’s an error of some kind that I’m going to have to payback 😢

@BeingGivenMoney without seeing the payslip it’s difficult to tell. The most obvious situations are payment of annual leave or a tax refund.

PAYE is Pay as You Earn and can include tax rebates and refunds. Your personal allowance is split into 12 so you benefit each month. £12,570 / 12 = £1,047.50 per month a 20% refund is £209.50. This is close to your £211 so highly likely that is what it is.

You need to contact your ex-employer asap and advise them you have incorrectly been kept on payroll and have been paid the £211. Ask them to close your record on payroll which should generate a P45 and to forward this to you with Octobers payslip. Follow up with an email confirming this.

As you are not working it should be fine unless you are in receipt of means tested benefits.

PAYE (Pay as you earn) manages income tax while you are in employment calculating the tax due after the annual tax free allowance.

Generally speaking, for people in straightforward circumstances, you get one twelfth of the tax free allowance each month. It normally works cumulatively but that's probably not relevant here.

If you've not used the whole allowance for the year to date you might get a refund. In that context, if you were paid late for holidays or whatever, you might get more than you think.

However I would not expect an employer to pay ongoing refunds. If when you go to new employer then, using the pay to date etc figures on your P45, the system will sort you out and you might get more in Month 1 than subsequently.

You need to check with the employer and/or your Government Gateway account to work out what's gone wrong.

My personal tax is messed up now becuase I was TUPE'd from one organisation to another and the new payroll contractor ignored the BR code on my P45 and applied the standard L1270, or whatever it is, instead and payed a massive refund. My full allowance was being used against other income, an occupational pension, whom HMRC, on whose books I'm now underpaid, or rather over refunded, have instructed to recover from me. I'm about £250 down as the current employer corrected it but seem not to have revised the return to HMRC.

Well after closer examination of the payslip it transpires the payments are refunds?!

And I understand refunds are given if you’ve been over-taxed which I’m guessing is what’s happened, but why are my refunds coming in the form of regular payments from my ex-employer?

I would have thought any refund would be given as a lump sum at the end of the tax year by the HMRC?

@BeingGivenMoney please see my post from yesterday @14:40.

You need to contact your ex-employer asap and advise them you have incorrectly been kept on payroll and have been paid the £211. Ask them to close your record on payroll which should generate a P45 and to forward this to you with Octobers payslip. Follow up with an email confirming this.

I was about to add the same advice as @Sisterpita as I'd come to the same conclusion; that you'd not been removed from payroll.

As you're not being paid salary then when payroll works out tax due to date it will, as a further month's worth tax allowance is added, show tax due less than tax paid and generate a refund.