Overpayment of wages - Tax and NI question

[Ki3r]

Evening all,

I found out recently, along with most of the other drivers at work that we have been overpaid since starting in August. They've worked it out at just over £400 for myself (getting paid roughly £0.34 a hour more than I should be for the last 37 weeks).

I have no problems with having to pay it back (I would rather I didn't have to though!), but wondering how it happens with tax and NI. Have I paid too much or too little? It might not be a huge difference, but I would rather it be in my account than someone elses!

Thanks .

[andy-xr]

It'll level out by itself if your payroll can do the basics

[The Moose]

If they pay your NI and income tax through PAYE then I would guess the amount you've been paid extra is after the NI/tax contributions?

ETA check your payslips from both before and after

[Eric Mc]

If handled properly, the calculation of PAYE and NI is a self-correcting process.

If you were paid a gross salary of £1,000 in error in one month, you would obviously pay PAYE and NI based on an amount of £1,000.

If the correct salary should have been £800, then you would have paid too much PAYE and NI on the extra £200.

If the following month, the employer corrects the error by paying you the correct Gross Salary of £800 less the correction of £200 in respect of the previous month, then you will suffer PAYE and NI on the reduced Gross Salary of £600.

So, after the corrections have been processed, you will have paid the correct PAYE and NI overall.

Of course, this is all dependent on the employer doing things correctly.

[Ki3r]

Thanks for the replies . I don't really understand tax and NI, but the simple answer is it should sort itself out?

Bit of good news though, I've worked it out and they underpaid me for the first month by £65ish, and not taken into account when I've taken time off unpaid, so only owe then around £250.

No as bad now!

[MrPicky]

Negotiate with them to take the overpayment out of your gross pay between now and the end of the tax year(april) in even installments. That way the tax and NI will sort itself out.

[strudel]

I find this interesting. Way back when I went to university I finished my job and was paid all my remaining holiday in bulk. As my employer was lazy and calculated weekly (as I was paid) I lost an amount to tax/NI. At the end of the year I could claim my tax back from HMRC, but I was told you can't claim NI back? How does this work?

[Eric Mc]

You CAN reclaim overpaid NI.

http://www.hmrc.gov.uk/ni/refunds-complaints/claim...

However, there are time limits (3 years) after which recovery of overpaid tax and NI is blocked.

[TwigtheWonderkid]

Say you're not prepared to pay it back but say you're happy for the mistake to be put right going forward. If they don't like that, tell them to go away and study Keenan V Barclays Bank, telling them that actually you're being really reasonable because the case sets precident for not repaying overpayments and insisting the employer continues to pay the new higher rate because you've now become accustomed to the higher wage and have made future plans based on that level of pay.

By not paying back, but allowing them to put it right for the future, you're meeting them halfway!