Help - Tax confusion!

Gooner350_2

Hello,

Im a newbie so please bear with me.....

Heres the story:

I was working for an Investment Bank for approx 2 years, when I handed in my notice and they were obviously calculating my final salary they called me down.

Apparently someone had made a mistake and they had been overpaying for a total of 13 months and I now owed the company just under £2.5K!

I came to an agreement with them and am subsequently paying that money back however should I not be getting some sort of tax and NI rebate for the tax and NI I paid on that money when it got overpaid to me? Would my old firm already have 'taken that in to consideration when working out what I had to pay back?

Have just received a note for IR saying my tax code has changed again - my personal allowance has been reduced (something about medical allowance) which means as of April my monthly pay packet will reduce (again!):mad:

Surely this doesn't seem right? Right??

moneywise22

Did they explain what they meant by overpaying? It could be that your tax and ni they have already taken off you was not calculated correctly and should have been more (resulting in your net pay being too high). This could be due to the payroll system they used perhaps. If they did not operate it correctly (as sometimes happens) it could be that each month your tax and ni was not calculated cumulatively (i.e. taking into account what you have already paid) and therefore would be incorrect. They have probably spotted the error, ran the payroll for the year again to give them the figures that should have been deducted, and now they need to take the balancing payment from you to pay to the inland revenue. If this is the case and this IS what has happened, then even if they didnt take the money from you the inland revenue would collect any tax and ni you owed by changing your tax code for the next tax year, because your employer has to submit returns to the IR to tell them what you have been paid and how much tax has been deducted etc, which tells them if you have paid too much or too little tax.

Hope this helps. I would be interested to know if this is not the case and something else has happened.