Hi Lindsay,

Thanks for using Sage City.

Tax is calculated on a cumulative basis, so it will always recalculate each period to ensure they've paid the right amount overall.  It's capped at 50% of the employee's pay. 

If you've processed a gross / pre-tax deduction to take the money back from the employee, then started processing again, it sounds like payroll believes that the employee owes a lot more tax, probably because their pay was reduced significantly from the overpayment, and is now calculating as normal. 

It's tricky to be able to advise correctly without knowing more around the circumstances of the overpayment, for example was it entered as a gross pay overpayment in the first place and how did it come about?

To prove if the calculations are right we would recommend checking with a manual tax calculation or using HMRC's PAYE calculator.

If this answer is helpful, please click More > Verify Answer.

Regards,

Andy

Sage UKI

Hi Lindsay,

Thanks for using Sage City.

Tax is calculated on a cumulative basis, so it will always recalculate each period to ensure they've paid the right amount overall.  It's capped at 50% of the employee's pay. 

If you've processed a gross / pre-tax deduction to take the money back from the employee, then started processing again, it sounds like payroll believes that the employee owes a lot more tax, probably because their pay was reduced significantly from the overpayment, and is now calculating as normal. 

It's tricky to be able to advise correctly without knowing more around the circumstances of the overpayment, for example was it entered as a gross pay overpayment in the first place and how did it come about?

To prove if the calculations are right we would recommend checking with a manual tax calculation or using HMRC's PAYE calculator.

If this answer is helpful, please click More > Verify Answer.

Regards,

Andy

Sage UKI

Thanks Andy, on speaking with a CIPP Tutor for 2 hours we deciphered the same answer, although it still baffled me why it over refunded the tax and then takes half his salary this month. 

but lesson learnt for anything in the future. 

Thanks for coming back Lindsay, great to hear that its resolved, and thanks for verifying the answer.