2016/7 PAYE tax refund

[Bruckshaw]

HMRC made an error in my 2016/7 tax code which resulted in a large overpayment of tax on my pension in October 2016. HMRC have admitted their mistake and issued a new, correct, code. Who is responsible for repaying me? My pension provider or HMRC?

[honeybee13]

Hello and welcome to CAG.

 

Can you tell us a bit more about what happened please? That will help us to advise you.

 

My best, HB

[Bruckshaw]

In August my pension provider's fund was sold to an insurance company. On August 25th I received a revised notice of coding with a large reduction in my code. In October my pension statement showed a 50% reduction in my net pension. I notified HMRC who admitted an error and issued a new notice with my old code restored. I now realise that they had deducted all of my net pension income for the first 5 months of 2016/7 (tax already deducted) from my tax free allowances which caused my code to fall dramatically. I am now owed the overpaid tax but I do not know who is supposed to repay it, HMRC or my new provider. It is unacceptable that it is just deducted from tax due each month as that would take 4 months for the deficit to be cleared. I need a lump sum payment.

[martin2006]

Any overpayment of tax would be refunded by HMRC

[slick132]

Hi Bruckshaw,

 

If the PAYE code has now been put right, next time they run the pension payroll, the new code will ensure you get back any tax overpaid as a result of any error during the current tax year.

 

So the refund will be made by the employer if they run the amended tax code in the same tax year as the error happened. If it's too late for the amended code to be run in the same tax year, you would seek a refund direct from HMRC.

 

The PAYE system works on a "cumulative" basis so, whatever has happened in the previous months (of the same tax year) that led you to pay too much tax, as soon as an amended PAYE code is issued and used, the pay and tax to date will be correct.

 

Edited October 13, 2016 by slick132

[Bruckshaw]

Thanks to all for your replies. In my case the overpayment is greater than the monthly tax deduction so can I expect to receive the whole rebate next month or in instalments? To pay me the whole rebate next month would require a negative tax deduction. Is that possible? I have asked the pension provider for a clarification but they have not responded.

[slick132]

Hi Bruck,

 

Without knowing your cumulative pay and tax details from 6th April, it's difficult to comment accurately.

 

However, the cumulative PAYE system should ensure that any error in tax deducted from 6th April to date is corrected on your next payment as long as the amended PAYE code is used.

 

I would expect it all to be sorted when you're next paid but let us know if this is not the case.

 

[ericsbrother]

usually the pension provider will be refunded and pass it on to you as it was a PAYE error. Your pension provider will use a real time system for tax matters so you should get it in the next payment cycle. If not phone them up and ask them why not

[slick132]

No, the pension provider simply uses the latest PAYE tax code on the next payment. The pension provider is not refunded so they can pass on a refund.

 

I'd suggest there's no need to contact anyone UNLESS the next payment fails to bring about a correction of the previous error.

 

If that happens, report here and we can assist further.