Paid arrears in wrong tax year, can anyone help?

fudge7000

Bit of a long situation, sorry!

I was on maternity leave mid march 18 - mid march 19,
I noticed my return payslip showed no salary (even though I had rang and checked I would be getting paid at the end of march for half a month). I rang them up and they said they would sort it and that I would get paid.

I had an amount paid to me without a payslip.

Come the end of april, I have been paid 1 1/2 months salary, with the amount I got in MArch taken off as "recovery advance NR"

However this means my salary looked much larger that month than usual, this has led to a couple of problems:
- if I had been paid in the correct month, I would have paid 20% tax, as was under the 40% band for that year, due to being on maternity leave, now I will have to pay 40% tax on it.
- My pension contribution has gone up a band for that month - I usually pay 9%, this month it has been 13.5%, which also wouldn't have happened if I had been paid correctly.

Is there anything I can do about this? Seeing as their mistake has cost me quite a bit, probably in the region of £400! I've spoke to them but they don't seem to understand the issue :mad:

Any ideas of what I need to tell them to do?

dori2o

This is covered here:

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye70023

Arrears of pay are earnings paid after the date that an employee should have received them and are usually paid as a lump sum. Arrears of pay are earnings just as if they had been paid at the right time. You can find more information on arrears of pay at EIM02530.

Arrears of pay may arise because

An employer or employee discovers that wages or salary paid in an earlier period were less than what should have been paid under the employee’s contract
The employer’s payroll or HR systems make an error
Equal pay legislation applies and the employer has to pay the arrears to the employee(s) or a court has ordered this
Legally, an employee’s tax liability on a payment of arrears arises in the tax year that the employee was originally entitled to be paid the extra amounts, not in the year that payments are eventually made. However, if arrears are paid in one lump sum in the current tax year then PAYE is due at the time of payment.

Read all of the guidance in the link above.

If you believe that you are entitled to the pay being dealt with as if paid in the 2018/2019 tax year because you will be a 40% taxpayer in 2019/20 then you will need to write to HMRC explaining the situation.

However, per the guidance, they will be unable to resolve this themselves until after the end of the 2019/2020 tax year.

Alternatively speak to your employers payroll again and see what they say.