Employer has overpaid me… again
Discussion
Hoping for some insight regarding an overpayment.
My employer (a very large company) occasionally cocks up payroll. Not usually too big a deal. If they underpay then they make good eventually, but every now and again they overpay. Most recently they paid me a Sunday premium of £34 a week for five weeks, after I stopped actually working on Sundays. I was taxed on these payments, of course, (I'm paid weekly, for clarification), but they clawed back all five weeks of £34. I took that hit.
This week they've overpaid me by a bit more, just under £500. The money won't actually reach my account until Friday, but my payslip has forewarned me. I'll be taxed on this. I called HR to ask why they've done this, but they "have to investigate". I asked where I stand on the tax, since the company will take back the full overpayment. They said, essentially, that I'll have to take the loss on the chin, nothing they can do, these things happen blah blah.
This really isn't fair. Is there anything I can do, or anything they SHOULD do?
I'm genuinely annoyed by this.
My employer (a very large company) occasionally cocks up payroll. Not usually too big a deal. If they underpay then they make good eventually, but every now and again they overpay. Most recently they paid me a Sunday premium of £34 a week for five weeks, after I stopped actually working on Sundays. I was taxed on these payments, of course, (I'm paid weekly, for clarification), but they clawed back all five weeks of £34. I took that hit.
This week they've overpaid me by a bit more, just under £500. The money won't actually reach my account until Friday, but my payslip has forewarned me. I'll be taxed on this. I called HR to ask why they've done this, but they "have to investigate". I asked where I stand on the tax, since the company will take back the full overpayment. They said, essentially, that I'll have to take the loss on the chin, nothing they can do, these things happen blah blah.
This really isn't fair. Is there anything I can do, or anything they SHOULD do?
I'm genuinely annoyed by this.
That's complete and utter rubbish.
They should only be recovering the net amounts not the gross amount. In fact, given the way that overpayments are recovered (from gross pay rather than net pay) you should automatically get the tax back.
ETA bear in mind that you will also have paid Employees NI and possibly pension on the overpayment and THEY will have paid Employers NI, all of which need to be recovered. And the easiest (normal) way of making the recovery is from gross pay.
They should only be recovering the net amounts not the gross amount. In fact, given the way that overpayments are recovered (from gross pay rather than net pay) you should automatically get the tax back.
ETA bear in mind that you will also have paid Employees NI and possibly pension on the overpayment and THEY will have paid Employers NI, all of which need to be recovered. And the easiest (normal) way of making the recovery is from gross pay.
They can will and should recover the gross amounts directly through payroll on the gross side, and the PAYE will correct itself and you get a rebate, if that doesn't flow through then do a self-assessment and claim it back at the year end. If they only do it as net then you will have paid too much tax.
Countdown said:
That's complete and utter rubbish.
They should only be recovering the net amounts not the gross amount. In fact, given the way that overpayments are recovered (from gross pay rather than net pay) you should automatically get the tax back.
ETA bear in mind that you will also have paid Employees NI and possibly pension on the overpayment and THEY will have paid Employers NI, all of which need to be recovered. And the easiest (normal) way of making the recovery is from gross pay.
That's my worry (annoyance); that they'll recover the full amount, likely in one hit, which will effectively wipe out my wages for a full week. The best HR could offer was that my tax code "might be adjusted next year". With Christmas around the corner, that's not really helpful to me. They should only be recovering the net amounts not the gross amount. In fact, given the way that overpayments are recovered (from gross pay rather than net pay) you should automatically get the tax back.
ETA bear in mind that you will also have paid Employees NI and possibly pension on the overpayment and THEY will have paid Employers NI, all of which need to be recovered. And the easiest (normal) way of making the recovery is from gross pay.
I know from past experience (this isn't even the 3rd or 4th time this has happened) they will indeed take the whole overpayment, leaving me out of pocket. I'm royally pissed off about it this time.
TWODs said:
They can will and should recover the gross amounts directly through payroll on the gross side, and the PAYE will correct itself and you get a rebate, if that doesn't flow through then do a self-assessment and claim it back at the year end. If they only do it as net then you will have paid too much tax.
Okey dokey. I'll see how it pans out. Thanks for the replies, all
Lo-Fi said:
That's my worry (annoyance); that they'll recover the full amount, likely in one hit, which will effectively wipe out my wages for a full week. The best HR could offer was that my tax code "might be adjusted next year". With Christmas around the corner, that's not really helpful to me.
I know from past experience (this isn't even the 3rd or 4th time this has happened) they will indeed take the whole overpayment, leaving me out of pocket. I'm royally pissed off about it this time.
I'm sorry to say I don't think your HR department knows how to run Payroll (I've had it in countless jobs, HR think all payroll do is press a button, and they have no knowledge of the tax implications).I know from past experience (this isn't even the 3rd or 4th time this has happened) they will indeed take the whole overpayment, leaving me out of pocket. I'm royally pissed off about it this time.
If they are deducting from net Pay it will NOT feed through to HMRC. As far as HMRC will be concerned your GROSS pay was X and therefore you will have been correctly taxed on X. Any deductions from net pay are nothing to do with HMRC. for example Union contributions, student loan deductions, or even paying into the office brew fund are all taken out of net pay AFTER tax and NI have been deducted and HMRC arent even told about them let alone your tax code being affected.
Hate to say it but i would go down the formal Grievance route and even take it to Employment tribunal as an unlawful deduction of wages.
Lo-Fi said:
TWODs said:
They can will and should recover the gross amounts directly through payroll on the gross side, and the PAYE will correct itself and you get a rebate, if that doesn't flow through then do a self-assessment and claim it back at the year end. If they only do it as net then you will have paid too much tax.
Okey dokey. I'll see how it pans out. Thanks for the replies, all
They have overpaid him so his gross pay is too high. this means that he has paid too much tax and NI
They need to recover the amount from his gross pay. By reduicng his gross pay it will reduce his tax and NI.
It will balance out eventually. At the end of the tax year just put your information in here and compare what it should be with your annual totals.
I do this occasionally throughout the year so I have a rough idea if I'll get a rebate / bill after the end of the tax year. If you only have one employer it will probably sort itself out though.
I do this occasionally throughout the year so I have a rough idea if I'll get a rebate / bill after the end of the tax year. If you only have one employer it will probably sort itself out though.
Countdown said:
It won't, because they're overpaying him gross and recovering the overpayment from net pay. Also as I mentioned earlier he will be overpaying NI at 13% which he won't get back, unless they process it correctly.
It will if they recover the gross from the gross side, if they make any attempt to recover this from net you should tell them to f-off and do their job properly.Countdown said:
It won't, because they're overpaying him gross and recovering the overpayment from net pay. Also as I mentioned earlier he will be overpaying NI at 13% which he won't get back, unless they process it correctly.
I guess anything is possible, but it would be beyond madness if they did that.I strongly suspect it's just not been explained very well (or is not understood by the HR person).
If too much tax has been paid, it should correct itself, but it might take a long time. My wife worked for a place for a few years that for some reason used to take too much tax and she automatically got a rebate around October time in the following tax year.
Sheepshanks said:
If too much tax has been paid, it should correct itself, but it might take a long time. My wife worked for a place for a few years that for some reason used to take too much tax and she automatically got a rebate around October time in the following tax year.
Under normal circumstances you’re right- it would correct itself. But in this case it won’t because the deductions are from net pay (after tax/NI). HMRC will look at the Gross Taxable Pay and compare this to the tax paid, and to them it will look correct. They don’t even see net pay deductions on the monthly FPS returns Countdown said:
Under normal circumstances you’re right- it would correct itself. But in this case it won’t because the deductions are from net pay (after tax/NI). HMRC will look at the Gross Taxable Pay and compare this to the tax paid, and to them it will look correct. They don’t even see net pay deductions on the monthly FPS returns
The gross overpayment won’t be deducted from net pay.Countdown said:
You may well be right but in that case why say that the OP is going to have to take the issue of overpaid tax “on the chin”? Recovering from gross pay would automatically correct the tax issue.
As I said earlier, because the HR person doesn't know what they're talking about. Or it's been badly explained to them. Or maybe the OP has misunderstood.Sheepshanks said:
Countdown said:
You may well be right but in that case why say that the OP is going to have to take the issue of overpaid tax “on the chin”? Recovering from gross pay would automatically correct the tax issue.
As I said earlier, because the HR person doesn't know what they're talking about. Or it's been badly explained to them. Or maybe the OP has misunderstood.Lo-Fi said:
My confusion is because, as I think I said up there somewhere, that this isn't the first time this has happened.. but I've never had a rebate. What will happen is the company will deduct the whole amount from one of my paydays soon, which will pretty much wipe out a whole weeks wages. If I'm understanding the replies so far, I can expect a tax rebate that will put me back on an even keel at this point. But, in the past, I've never seen any money come back from the taxman after one of the co's 'errors'.
What should happen is that it gets fixed over subsequent pay periods. You don't get a specific rebate as such, you just get some extra money in a subsequent payslip - as long as there is enough of the tax year left. As an example - imagine the tax free amount is £12K, and you pay 20% on the next £36K (I know you don't, but these numbers are just for illustration). The payroll system divides those numbers by 12 and then applies 1/12 to each pay period. So, in month 1 your YTD allowance is £1,000 for 0 tax and £4,000 for 20% tax. In month 2 your YTD allowance is £2,000 for 0 tax and £8,0000 for 20% tax - etc. If you earn exactly the same every month, this has zero impact, but if you earn variable amounts you could end up paying loads of tax one month and very little (or possibly negative tax) the following month. Just noticed you're paid weekly - it works exactly the same, just divided by 53 (or whatever the number of pay periods is). The Maths is slightly harder (less chance of nice round figures to work with), but the principle is the same.
I don't think I've explained this very well, but maybe there's enough there to put your mind at ease.
omniflow said:
Lo-Fi said:
My confusion is because, as I think I said up there somewhere, that this isn't the first time this has happened.. but I've never had a rebate. What will happen is the company will deduct the whole amount from one of my paydays soon, which will pretty much wipe out a whole weeks wages. If I'm understanding the replies so far, I can expect a tax rebate that will put me back on an even keel at this point. But, in the past, I've never seen any money come back from the taxman after one of the co's 'errors'.
What should happen is that it gets fixed over subsequent pay periods. You don't get a specific rebate as such, you just get some extra money in a subsequent payslip - as long as there is enough of the tax year left. As an example - imagine the tax free amount is £12K, and you pay 20% on the next £36K (I know you don't, but these numbers are just for illustration). The payroll system divides those numbers by 12 and then applies 1/12 to each pay period. So, in month 1 your YTD allowance is £1,000 for 0 tax and £4,000 for 20% tax. In month 2 your YTD allowance is £2,000 for 0 tax and £8,0000 for 20% tax - etc. If you earn exactly the same every month, this has zero impact, but if you earn variable amounts you could end up paying loads of tax one month and very little (or possibly negative tax) the following month. Just noticed you're paid weekly - it works exactly the same, just divided by 53 (or whatever the number of pay periods is). The Maths is slightly harder (less chance of nice round figures to work with), but the principle is the same.
I don't think I've explained this very well, but maybe there's enough there to put your mind at ease.
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