Payroll made a big mistake

chrisbur

There are not many facts known about this case. In my view it is impossible to calculate any figure for overpayment on the limited facts we have been given.
We know that a very large overpayment was made in month 1
This has not been corrected as yet and as far as we know there has been no adjustments made to the payroll other than the now corrected monthly salary being paid.
Some overtime in mentioned but no figures for this.
We do not know the tax code.
Basic salary appears to be £27338.00 and £22782.34 plus possibly some overtime was actually paid for month 1.

A large overpayment like this in month 1 will have had tax deducted at 40% and 45%.
The various calculations using tax calculators have worked out the difference (apart from any overtime if any applied to this month) but that only gives the difference as at month 1.
If the tax code remained on a cumulative basis then tax paid in the first month at 45% and 40% would month by month be reduced to 40% and 20% with quite possibly by the year end all tax having been reduced to 20%
This would mean that whatever was owed as at the end of month 1 as each month passed this figure would be getting higher.

So without the full details there is no way of knowing what this overpayment figure should be.

Out of curiosity I ran some figures. I assumed £700 overtime every month and calculated tax on a 1000L code which was applied on a cumulative basis for the full year.
It came to £11437 owed as at end of month 1 and £13066 at the year end.
Just to stress these figure are made up it is just to show the affect that allowing this error to run uncorrected for the year would have.

burnoutbabe

as far as I can tell, all they need to do is work out the gross overpayment, not the net. So they were paid 10 times the salary in month 1. So they need to pay this back.

Then, there was overtime (was this correct per the payslip).

And a pension payment (if this was employer and is now in pension, they probably need to just let it go, if employee well no worse off as its your money still)

And a healthcare deduction (should not change)

So if they overpaid by £22k or so, then apply that overpayment as a gross deduction in March 15 (month 12) and let the PAYE sort its self out. (so net pay for March 15 will be a big negative amount) Any final differences will be made on the 2015 tax return.

So its only the gross to worry about now, to get money back to employer. The tax side will be easy to sort via a tax return.

dancingfairy

I'm confused why it wasnt fixed at the time. Presumably it's now had a knock on effect with the cumulatives? it seems they should just have reversed the gross?
Anyway if you cant get any sense from them you could try acas.
df