Pay back of over payment

Blonde123

Hi

I took the full 52 weeks maternity leave. I fully understood the last 13 weeks would be no pay. Unfortunately my manager at the time put the incorrect return date. For 3 months I was overpaid. Each month I informed my employer and the payroll company. Each month I was told it will be corrected. Finally 4 months on the date has been changed. I knew the money I received was wrong so I put this aside ready to pay it back. The payroll company are now telling me I have to pay back more than i was physically paid as they go on gross pay.
I have said I am more than happy to pay what I received but can not physically pay money I don't have for the tax and NI. I have reached out to citizens advise but my line manager is now saying i should pay £1000 a month and then pay myself a wage from the money I put aside.
Firstly why should I? 
Secondly how can I be expected to pay more than I physically received?
Any advise
Thanks

Bobbobbobingalong

You have, admirably, satisfied the minimum legal requirement when noticing an overpayment by informing your employer and putting the money aside ready to be paid back. The fact they have made a mistake that has generated tax is their issue - give them back what they have given you in error and tell them they can sort the rest out themselves. There is nothing they can do to you (caveat - assuming you have been there more than two years).

Marcon

Blonde123 said:

Hi

I took the full 52 weeks maternity leave. I fully understood the last 13 weeks would be no pay. Unfortunately my manager at the time put the incorrect return date. For 3 months I was overpaid. Each month I informed my employer and the payroll company. Each month I was told it will be corrected. Finally 4 months on the date has been changed. I knew the money I received was wrong so I put this aside ready to pay it back. The payroll company are now telling me I have to pay back more than i was physically paid as they go on gross pay.
I have said I am more than happy to pay what I received but can not physically pay money I don't have for the tax and NI. I have reached out to citizens advise but my line manager is now saying i should pay £1000 a month and then pay myself a wage from the money I put aside.
Firstly why should I? 
Secondly how can I be expected to pay more than I physically received?
Any advise
Thanks

See https://www.litrg.org.uk/tax-guides/taking-employee/pay-and-deductions#toc-overpayment-of-wages and in particular note:

'An employee shouldn’t be asked to pay back more than they actually received. As an alternative therefore, or where an employee has left (and the employer decides not to simply write the overpaid amount off), an employer should work out the amount of the overpayment that the employee actually received (that is, the net amount, after deduction of tax and NIC) and recover that (either by making a deduction from net pay or by asking the employee to pay it back by cheque for example).

Once that has been received, the employer should go back and rewrite the incorrect payroll entries to recover the overpaid tax and NIC from HMRC. This should restore the status quo.'

...but so much easier to try and get the employee to do the legwork. Don't. You've done nothing wrong and everything right here.

Brie

Nothing to say you have to pay it back instantly.  I'd do it in installments and not pay more than you received.

General_Grant

The OP has the funds to hand and may well have gained some interest having put the money aside.  Paying in instalments involves extra work for the OP (writing extra cheques, for instance).  Much better to clear it straightforwardly.
And, of course, it should just be the actual total over-payment received into their bank account, not a penny more.

Undervalued

Brie said:

Nothing to say you have to pay it back instantly.  I'd do it in installments and not pay more than you received.

Well morally and legally there is! Although in practical terms there is very little they can do to prevent it.

TELLIT01

Marcon said:

See https://www.litrg.org.uk/tax-guides/taking-employee/pay-and-deductions#toc-overpayment-of-wages and in particular note:

'An employee shouldn’t be asked to pay back more than they actually received. As an alternative therefore, or where an employee has left (and the employer decides not to simply write the overpaid amount off), an employer should work out the amount of the overpayment that the employee actually received (that is, the net amount, after deduction of tax and NIC) and recover that (either by making a deduction from net pay or by asking the employee to pay it back by cheque for example).

Once that has been received, the employer should go back and rewrite the incorrect payroll entries to recover the overpaid tax and NIC from HMRC. This should restore the status quo.'

...but so much easier to try and get the employee to do the legwork. Don't. You've done nothing wrong and everything right here.

Point the employer to that and see what they say.  Once they see that they are wrong they will hopefully back down.

chrisbur

Also some guidance on correcting for employers here....
https://www.gov.uk/payroll-errors/correcting-pay-or-deductions

Grumpy_chap

Blonde123 said:

Hi

I took the full 52 weeks maternity leave. I fully understood the last 13 weeks would be no pay. Unfortunately my manager at the time put the incorrect return date. For 3 months I was overpaid. Each month I informed my employer and the payroll company. Each month I was told it will be corrected. Finally 4 months on the date has been changed. I knew the money I received was wrong so I put this aside ready to pay it back. The payroll company are now telling me I have to pay back more than i was physically paid as they go on gross pay.
I have said I am more than happy to pay what I received but can not physically pay money I don't have for the tax and NI. I have reached out to citizens advise but my line manager is now saying i should pay £1000 a month and then pay myself a wage from the money I put aside.
Firstly why should I? 
Secondly how can I be expected to pay more than I physically received?
Any advise
Thanks

Have you now returned to work?
The over-payment should be processed as a deduction from payslip.  The tax will then sort itself out over the year.
Given the overpayments were across 4 months, the deductions would be reasonably applied across 4 months.

Marcon

Grumpy_chap said:

Blonde123 said:

Hi

I took the full 52 weeks maternity leave. I fully understood the last 13 weeks would be no pay. Unfortunately my manager at the time put the incorrect return date. For 3 months I was overpaid. Each month I informed my employer and the payroll company. Each month I was told it will be corrected. Finally 4 months on the date has been changed. I knew the money I received was wrong so I put this aside ready to pay it back. The payroll company are now telling me I have to pay back more than i was physically paid as they go on gross pay.
I have said I am more than happy to pay what I received but can not physically pay money I don't have for the tax and NI. I have reached out to citizens advise but my line manager is now saying i should pay £1000 a month and then pay myself a wage from the money I put aside.
Firstly why should I? 
Secondly how can I be expected to pay more than I physically received?
Any advise
Thanks

Have you now returned to work?
The over-payment should be processed as a deduction from payslip.  The tax will then sort itself out over the year.
Given the overpayments were across 4 months, the deductions would be reasonably applied across 4 months.

The snag is that it appears this crossed through a tax year end, so 'sorting itself out' won't happen automatically, especially in respect of NI.