PAYE overpayment - employer trying to reclaim money lost to deductions

joshw86

Last month a payroll glitch (or, more likely given that my payroll is handled by Capita, an oversight by a useless moron) meant that I was overpaid by an enormous amount, roughly three times what my normal basic pay was.

This meant that my payslip deductions were correspondingly enormous, with several times the usual monthly amount going as tax, NI, student loan and pension contributions. Combined with an expected year-end tax adjustment, my net pay came in at just about £100 more than usual.

Payroll are now doggedly pursuing me for over £1,000 that they have overpaid me by. The trouble is that I live permanently in my overdraft and due to deductions my net pay received only a fraction of the overpayment in my gross.

So what do I do? I cannot afford to repay the money they are asking for, and, even if I could, some of it I am likely to never be able to reclaim from the various places it was deducted to (in particular I don't think I will be able to claw back the overpayment on my pension until it matures. In 40 years' time).

Should I tell them that they have to wait until I have managed to apply for rebates on every single overpaid deduction? Are they even legally able to claim back an overpayment made through their own error (in the same way that a supermarket wouldn't be able to claim back change given in error)?

Help!

Any

They need to sort it out in the next payslip-payroll run or something! So your accumulating totals are in line and the accumulated tax will adjust itself then.
They cannot overpay you by £1000 gross and expect you to give them £1000 back in cash.
It needs to be sorted via a proper way.

joshw86

Thanks for the response.

Should a payroll department dealing with lots of PAYE employees be able to claim back tax, NI, student loan and pension contributions made in error without any intervention on my part?

I'm happy to pay back the surplus in net pay I got (which ideally they would take out of next month's basic pay pre-tax!), but I think it is totally unreasonable to expect that I should contact HMRC and my pension provider off my own back to sort out their blunder.

The attitude of the people in payroll who I have spoken to about this so far has been "it doesn't matter that you have overpaid into your pension this month - just pay us the money back and enjoy the slightly larger pension when you retire"! None of them seem to appreciate that a) I cannot sacrifice £200 and still afford to live and b) I am a long, long way from being able to retire.

comeandgo

Are you saying the error was on the 2012/13 tax year? If so that is a bit of a problem and your employer should be doing all they can to help you. Unfortunatley a wage error is something an employer can claim back directly from your wages but most employers will work with their employees and come to an agreement.

joshw86

The overpayment and over deductions were made in my April payslip, so period 1 of 2013/14.

Any

Yes, they should be able to sort it out themselves. It's not your fault and not your problem. Apart from anything else you don't even have the right contacts!
The way I see it they can deduct the gross wrong pay in next months wages. Tax etc re_adjust itself. Then not do a pension deduction until accumulatively the right amount to date is showing.
For student loan.. not so sure about that, theoretically it could sort itself out again with the gross amount accounted for now, but not 100% sure.
Ask to speak to payroll manager and tell them to sort it out. Apart from anything else you need to have the right amount of gross wages and tax showing on your P60 at the end of the year, so the correction must be done via payslips!!

comeandgo

As Any says, if they deduct the overpaid amount the tax will sort itself out though not sure if that can be done in one month or a few, ask them not to take a pension deduction from your wages as you overpaid the last month. The thing I have not been able to get my head round is the NI situation. Overpayments in NI are not given back though you will pay less NI when deduction to pay back wages overpayment is taken but will it equal itself out - or could you be better off? Need actual figures to decide that.

joshw86

Any wrote: »

The way I see it they can deduct the gross wrong pay in next months wages. Tax etc re_adjust itself. Then not do a pension deduction until accumulatively the right amount to date is showing.

Deducting the wrong gross pay from next month's wages won't work, because it will leave me with next to nothing for my net pay. My net pay is just about enough to cover all my outgoings as it is.

The situation in summary is that due to over paying my gross, the company are £1,000 down and I am £100 up. The remaining £900 is split between the exchequer, NI, student loans company and my pension, with no easy way for me to get at it.

Given that I can't afford to take any sort of appreciable hit to my net pay, I can't see a way of getting that £900 back to the company, balancing my year to date earnings and making sure I don't end up paying more than I should have done into NI, student loan and pension.

The main thing for me is making sure my year to date earnings are correct and to not have any further deductions made until my actual earnings tally with the amount of tax etc. I have already paid. Should it be possible for payroll to:

• Put a stop on my monthly deductions for tax etc.
• Take a chunk out of my monthly pretax earnings that leaves me with the correct net pay
• Once enough month's have passed that my year-to-date earnings are at the correct level, resume my monthly tax deductions

Or is that mental?

agrinnall

I think that what should happen is that there will be a refund from HMRC that will repay most of what they are owed, so that the only impact on you would be a reduction in your net pay of the £100 you were overpaid last month. But I think they would have to be careful about how they put it through to make sure it's not messed up. If Capita have a way of doing a dummy payroll run before doing the real one, which they should have, then that might tell your employer (and hopefully you) if it'll work out right.

getmore4less

you numbers make no sense

The larger over payment of £1k, TAX, NI, studant loan would not take £900 off that.

What is the end of year tax ajustment amount all about?

Firefox1975

They could very easily just pay you £0.01p for the mth.

this will automatically pay back any tax overpayment and make you unliable for pension contributions etc during that mth.

they will have to do some reconciliations to work out how best to balance the pension due over two mths etc to work out whether to pay you 0.01p or may be £123.24 (Who knows!) but whichever figure gives the correct amount payable for two mths (but you have already paid for in the previous mth!)

as a previous poster says, the NI could be an issue as this is not a cumulative tax and you will have overpaid.

once again, they will have to work out what you SHOULD have paid over the two mths and see what you did actually pay in the previous mth and adjust accordingly.

The above would be tricky for a payroll "expert" who has only ever used payroll computer software! get your manual tables out and do it the old fashinoned way! :-)

but OP, your payroll dept can sort this out, they just need to think outside the box abit to get to the right figures, payroll software will not help them with this one.:D And HMRC wont care as long as they can keep a record of what adjustments they made and why. I am guessing any adjustment will have a minor affect on the mthly/quarterley payment to HMRC anyway.