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My wifes employer messed up and overpaid her and now wants it back which is fair enough, even though we had to tell them.
However their request is based on the pay before tax and not take home. She is PAYE and this was a second job (both through same employer).
Am I right in thinking that they should only ask for the take home pay back - then they sort out the tax, pension etc that they paid themselves?
Absolutely! They should request the actual net overpaid amount.
Ask to see their calculations.
Ultimately, yes, otherwise your wife is more out of pocket, unless they will also arrange PAYE, employee NIC and pension rebates back to her.
Argue that she repay the net and that they sort the rest.
Is it possible to suggest deducting from future payments?
If her employer made the error, then they need to make the necessary payroll adjustments to fix the NI, Tax and any other deductions.
Depending on the payroll system used, it isn't rocket science.
I've been managing payroll departments for nine years and it never ceases to amaze me what employers seem to be ignorant of.
depends if they are going to make the deduction from her gross or nett pay, surely?
Nope
if she is overpaid she will have also overpaid taxes - however when she pays back her earnings the following month will be far lower - she will then underpay tax to even it out.
She does not pay it back as cash - she pays it back out of future earnings - thus at the end of the year her total earnings are correct - and her tax will also be correct.
as an example - pay is £1000 a month. She is paid £1500. She pays tax on 1500. next month pays back the £500. she only pays tax on the £500 paid not the 500 returned. Over the two months she has paid tax on £2000 as is correct
Tax is calculated on the total earnings year to date not on the earnings each month
TandemJeremy is spot on.
So say she owes £1000 based on the gross salary over this lengthy period its been going on - they said ok we will just divide that by the next ten months.
She has paid tax on £1000 so her next few moths will have 100 missing but the tax to pay on her remaining job will be loads less than normal meaning it will probably be only about £50 a month not £100?
Arghhhhhhhhh my brain!
Yup it'll balance out as the tax and NI will be less than normal. So after take offs it won't be £100 less per month,
