Overpayment of wages. Advice please.

missh_3

Hi am hoping someone can advise me.

I have been on maternity leave since February and intended to take three months unpaid maternity leave from November, using my annual leave to carry us through the last three months. I contacted my manager in November to ensure my annual leave forms had been signed, i had discussed my plans with her before leaving on maternity leave. For some reason she signed me back into work in November, resulting in being paid annual leave and full time wages. I recieved approx £2900 overpayment. I contacted payroll and put the money aside to be paid back. I have recieved a letter instructing me to pay back the gross amount either in one instalment, which i am unable to afford, or in monthly instalments. I have returned to work on reduced hours, and will pay childcare using vouchers so will be deducted from my wages. I also pay pension and for a lease car, to pay in instalments it will take me months to pay back, i do not want to be tied to this as my work plans may change. I am also concerned if i do pay back in instalments how it will effect my tax. I was hoping to apply for tax credits in April.
Is it not possible to pay back the net amount and work to sort out the tax etc, as it was their mistake?

I find it so confusing, and would really appreciate some help thanks.

mountainofdebt

I must admit I can't see the problem in repaying the money, either in installments or as a lump sum, if you have put the money aside.

However, my gripe would be that your employers are expecting you to refund the overpayment including tax whilst conveniently forgetting that you have paid tax on this amount.

chrisbur

What is required is for your employer to recalculate each month that has been paid incorectly so that they have a corrected pay detail for each month. This will then show the correct net pay that you should have recieved which can be deducted from the actual net pay you recieved, the differance is what you pay back. The computer year to date record is then altered to agree with the corrected calculation of the wages so that the end of year records have figures that agree with what the wages should have been. All the payroll systems that I have used have had a facility to either overwrite the year to date figures or to manualy adjust them, most had both. Then of course keep clear records of what has been done in case of audit.

missh_3

Exactly Mountainofdebt, I can pay back the net, they are asking me for the gross. its the effect it has on my tax thats concerning me. They want to deduct a set amount from my wages each month, then i use money they overpaid me with. But as i was overpaid. i also paid too much pension and NI etc how does this all get sorted? I would rather pay back the net and they sort the rest! Thanks for your reply

mountainofdebt

They should reclaim the money before the calculation of tax / ni so that in effect will correct the issue of tax .

(There was another thread on the same subject on here quite recently where it was all explained mathematically )

As for the pension I'm not sure how that could be sorted - but there again if your employers are making contributions then they will have made overpayments as well!

DVardysShadow

mountainofdebt wrote: »

They should reclaim the money before the calculation of tax / ni so that in effect will correct the issue of tax .

It is unreasonable to expect repayment of gross, when the employee has been overpaid net. You cannot expect employees to have the extra money to pay back gross.

Employer should produce corrected payslips and OP should pay back difference.

missh_3

Thankyou everyone for your advice, I did read the previous post about an overpayment and how the gross could be paid back through deductions from monthly pay, which would then adjust the tax, I have worked ot with all the deductions from my wages NI, Pension , Tax, lease car and childcare vouchers i could only pay a small amount of each month so it would take me approx eight months to pay the Gross figure back, due to personal circumstances i do not know if i will continue to work later in the year, so really want it sorted as soon as possible. I have phoned payroll and quoted the advice from this forum and they have agreed i can pay back the net, I have asked if the tax will be sorted and adjusted and they inform me it will. I will speak the tax office regarding this issue before i decide what to do. Just have to find out what will happen about the pension and NI overpayments? If anyone can tell me that would be helpful.