5 months overpayment by work - anyone help with tax?

[Gastontheladybird2]

Hi ladies,

So my work have been overpaying me since 1st October.

I was full time and then moved to part time but still received a full time salary until the end of feb. I have kept the net difference aside as I've calculated it. The tax and ni side of it is confusing the life out of me.

My full time wage was roughly 23k and this has now dropped to circa 12k for context.

Hr have said they will take the money back gross however this just makes no sense to me.

I am paying back money I haven't had, and as far as I understand I won't be paying much tax on my new salary anyway.

Does this seem right?

I'm confused.
You said you haven't received it yet been paid for full time for months when you were only part time?

I'm very tired so apologises if it's just me not understanding.

It is correct to take the gross overpayment back. By doing this your tax and NI will be corrected via PAYE.

I wouldn't pay it back. I would just ask them to deduct from future earnings. They will deduct it from your gross earnings, that would put you in a better position.

You are right that you will have paid tax and ni on the higher figure but I think when they say deduct it gross they mean thats the figure they will enter to the payroll software and the tax and ni will automatically be calculated the same as if they were paying you the money but in your case it will be a negative figure. If any refund is due it will be paid to you via payroll hopefully in this pay period.

It is normal to deduct gross and that would usually be fine. However, if you are only earning £12,000 a year you won't be paying tax so wont get any tax relief. You will be paying NI so will get that relief.

If it was being paid back within the same tax year then you would be ok but as the tax year is pretty much over then it won't.

Insist on a net over payment figure and say you will pay back in full immediately. This is more work for them but in your situation I would insist.

You will struggle with getting an NI refund...you could speak to HMRC about how to sort this out - because the NI is not self correcting like income tax.

Given your work have screwed up - they should pay the NI overpayment caused by their mistake.

Mad that they didnt do anything about it in October?

Why did it take five months to sort this out?

It is correct that they deduct the gross overpayment from your gross future payments. If this has all happened within the same tax year, it would definitely have corrected the cinema tax automatically. Yours is potentially complicated because your correction is going into a new tax year, hard to predict what impact this will have without working it through with your actual numbers (which I would be happy to do if you are happy to share).

Your overall NI has been effected. You will have had the full benefit of a flat NI-free monthly amount when you were overpaid and you will have the full benefit of the flat NI-free monthly in the corrected pay, your salary level will mean you will pay 12% on the rest. I would check if I had all the actual numbers but I suspect this will work out fine.

Sorry I mean to say Your overall NI may not have been effected

Just opened this again....

*income tax not cinema tax. 😣

NI is not cumulative. They need to roll back the payroll and re-do or you will not get the NI all back on those levels.
Also, do you pay into a workplace pension? Recaculating is not as straightforward as them simply deducting the overpayment.

It happens 🤷‍♀️ and can be sorted out(by them!) But...make sure they do it correctly so you dont lose out!

Thank you everyone for your input.

I've got no idea how it has taken so long. I don't work for a small company.

I've still had no further update re repayment plan. The full figure they've given me is roughly £6200 for the overpayment which is completely wrong - they've calculated it from 1st August for some reason. Waiting for a correct figure.

I don't pay in to the pension. I do pay student loans back though so I think that will be an issue to get back also.

Yes it will definitely role over into the next tax year.

I agree, I think me paying back the net difference should be it sorted, and they can work with hmrc to get the tax back. If I pay back gross with no tax relief then surely I'm out of pocket for their mistake

Hmrc will not refund the ni as easily as tax, I would speak to them and explain what has happened. As ni is paid on the weekly / monthly wage, not earning this month wouldn't get you a refund, just a month without contributions unless it's done in a certain way

If they haven't done the year end on the tax system, they can go in and do a correction on each month, it's essential to do it before they close the year, I will be closing mine end of next week and producing the p60's so it's essential they act fast

My manager is chasing the payroll team and has said he hopes to hear something next week so I'm not at all hopeful of anything before the 6th, especially given easter.

If (or when) we move into the next tax year what will happen then? Thanks again for sharing your knowledge everyone