Overpaid at work, Repayment help

Sheils_2

Hi, i really hope someone can offer me some advice.

I have recently been overpaid quite substantially during some extended leave from work in which i was out of the country. Now back home and having returned to work i have made work aware of these overpayments. I can happily repay the net sum i was overpaid having not spent it.

However work have suggested i now owe the gross sum paid to me which results in me owing far more than i have actually been paid. I can pay the net back in one sum but a gross repayment would have to be paid back over time being deducted from my wages.

My confusion is why i need to pay back a gross sum for their error ?
My normal pay deductions include a pension contribution and a student loan repayment. I could understand if this was owed but surely tax and National insurance discrepencies should now be sorted by my employer rather than myself being out of pocket and having to have a complicated and lengthy struggle to get back the tax and NI that i will be paying back directly to my employer if the gross sum is paid ?

Hope someone can help.
Thanks

InsideInsurance

You would not be out of pocket as when the reversal of pay is put into their PAYE calculator it will reduce your future deductions.

I know when I was overpaid once by mistake a long time ago I was given the three options of them taking it from my bank (I worked for the bank), taking it from my next pay or deducting it over 4 months from my pay. I was required to pay back the gross amount and my next payslip or two had no tax deductions made as a result (from memory)

LadyMissA

They can just do a deduction at GROSS on your next pay or over a few pay dates as a - figure therefore reducing the tax and NI paid as these will probably be none exsistant or a refund

Sheils_2

LadyMissA wrote: »

They can just do a deduction at GROSS on your next pay or over a few pay dates as a - figure therefore reducing the tax and NI paid as these will probably be none exsistant or a refund

Can you explain what you mean by a deduction at gross ? Thanks the whole tax and NI payments are a bit beyond me.

My only real concern is that i will be owed a tax and NI repayment and will have to struggle to get this repaid after the end of the tax year which will leave me out of pocket for the next few months?

thanks

Evilm

Say that your salary is £1k per month gross
Your over payment is £500 (gross)

Then on the left hand side they will put

Salary - £1000
Correction (£500)

Total £500

And then the tax and NI etc will be calculated off the Total so the tax you already paid on the overpayments will be offset against the fact you are paying less tax this month.

For example if your tax would have been 20% (It won't be but its easier for me to do the figures) then it would have been as follows:

Salary £1000

Tax (£200)

Net Pay £800


With the deduction:

Salary £1000
Correction (£500)
Total £500

Tax £100

Net Pay £400.

Then the employer pays you £400 and you keep the overpayments as the rest of this months salary. You will have been paid the other £400 in the earlier overpayment.

If the overpayment took you into a higher tax band it gets more complicated but basically stays the same but it might end up with a negative tax figure and you might end up with a refund in your salary packet.

There should be enough time for it to be sorted out before the end of the year unless it is more than a couple of months salary.

LadyMissA

Sheils wrote: »

Can you explain what you mean by a deduction at gross ? Thanks the whole tax and NI payments are a bit beyond me.

My only real concern is that i will be owed a tax and NI repayment and will have to struggle to get this repaid after the end of the tax year which will leave me out of pocket for the next few months?

thanks

No you wont owe anything as in fact you have overpaid as the salary wasn't meant for you.

As explained above this post is correct or what they should do.

Do NOT give anything back in cash for the overpayment they should do it all via the payroll but its BEFORE deductions (gross pay) not after (NET)