Work Overpayment issue

[Knowles1983]

Hi

 

I began a new job in June 2013. For the role I was offered car allowance @ £360 per month by my employer. I told my employer that I do not drive, therefore they offered to pay me the car allowance for 6 months until 31 December 2013 - on the view that I must have a full driving license by 31st December for the payments to continue beyond 2013.

 

In August my father had a heart attack and subsequently had to have double bypass surgery - this stopped my lessons for around a month. Then in October 2013 I was diagnosed with pneumonia - I therefore stopped the lessons again until the end of the year.

 

My wages wary every month and I usually just check my bank account to see the money that was paid in, seldom check my payslips however it turns out that my employer had continued paying the allowance after the New Year.

 

Last month sadly my mother passed away and I was I required a month off to look after my father. My work offered to pay me one week compassionate leave but said I would need to resign if I wanted a month off. Fair enough, so I resigned.

 

This came to light when they were calculating my last payment - the total amount was £2k which I was going to use to live on for the next month or two until I get back to work and find another job - i.e. this money has to pay my rent and bills.

 

They explained that they had over paid 4 car allowance payment of £360, totaling £1440 which would be deducted from my last payment of £2000. Thus meaning I would net somewhere in the region of £600.

 

I have a couple of questions I hope you can help with.

 

First one is, Can the employer rightly deduct this money from me in a lump sum?

Second one is, I paid 20% tax and 12% NI on these car allowance payments - therefore meaning I received around £1000 net out of the £1440 that my employer paid me. Yet they are taking £1440 from me, leaving me £440 short due to their oversight - is this legal?

 

Lastly I understand that if I try to sign on (which I have never had to do in the past) that I will not receive any benefit for 26 weeks as I 'resigned' from my position.

 

I am left in a terrible financial position, any advice would be really really appreciated.

[honeybee13]

Hello and welcome to CAG. I hope the forum guys will be along later with advice for you.

 

My best, HB

[Emmzzi]

Hi, sorry you are having a hard time just now.

 

Technically they can't deduct it if it'd take your rate below NMW, but they can go through the court to reclaim it.

 

In practice if they deduct it, you'd need to go to court to get it back.

 

Much better to have a chat about a repayment plan.

[CrappoMan]

Second one is, I paid 20% tax and 12% NI on these car allowance payments - therefore meaning I received around £1000 net out of the £1440 that my employer paid me. Yet they are taking £1440 from me, leaving me £440 short due to their oversight - is this legal?

 

The effect of this is your final salary will be reduced by £1440, so you will pay £288 less PAYE and £172.8 less NI on your final salary as you would have paid had you received the full £2000.

 

If your final salary isn't enough to pay that much PAYE, you will have overpaid your PAYE and can either reclaim it as a PAYE refund or it will work itself out as you earn more through the tax year.

 

If you have overpaid NI, I'm not sure if you can claim it back. NI is worked out on each months salary in isolation, unlike PAYE which is amortized over the tax year. You may have to approach your company and explain that this will cause you to suffer a loss due to their mistake and they should put that right.