Owe tax because of overpayment

Louiselody

Can’t find a better forum for this. I switched jobs between government departments last April. My old department kept paying me and I notified them immediately. They paid me for three months despite repeatedly asking them to stop and to reclaim it. They stopped after June but never reclaimed it (despite more requests). I am now in a new tax year and have been notified by HMRC that I owe tax (presuming it’s because of the overpay, and that it probably pushed me into a higher tax threshold). What’s the best approach? Will I have to keep arguing with the old department to reclaim? Will HMRC accept this and not expect me to pay the owed tax in the meantime? 

Dazed_and_C0nfused

Louiselody said:

Can’t find a better forum for this. I switched jobs between government departments last April. My old department kept paying me and I notified them immediately. They paid me for three months despite repeatedly asking them to stop and to reclaim it. They stopped after June but never reclaimed it (despite more requests). I am now in a new tax year and have been notified by HMRC that I owe tax (presuming it’s because of the overpay, and that it probably pushed me into a higher tax threshold). What’s the best approach? Will I have to keep arguing with the old department to reclaim? Will HMRC accept this and not expect me to pay the owed tax in the meantime? 

HMRC will deal with the facts.

Which, from what you've posted, are that you have been paid by two separate employers for a short period and, I would guess, got two lots of tax code allowances in that time.  Leaving you overpaid in wages and underpaid in tax.

That tax underpayment won't change until you pay the original employer back and they send some updated earnings info to HMRC.  Then your tax position for that tax year should be updated quite quickly.

Presumably you have set the overpaid income aside somewhere earning you some interest.  Just pay the tax from that (if you got a Simple Assesment letter, PA302) or leave it to be included in your tax code next year if you got a P800.  

It will be resolved eventually, you and your employer just need to fix the original problem and then they notify HMRC of the updated earnings.

Louiselody

Thanks - I’m having zero success getting old department to reclaim. Been chasing them for 15 months to do so. Yes I put the overpay aside in a high interest account. I’ll keep trying 

Grumpy_chap

If the OP is usually in the basic rate tax band and the three months of over-payment resulted in that year crossing into the higher rate band, then the OP needs to be sure that the reclaimed wages are correctly processed for the tax year applicable.  The result otherwise might be the OP paying 40% tax on receiving the over-payment but only relieved at 20% tax when the repayment is processed.