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Tax refund

  • Associate PM.Dip
  • Practice Licence
  • 8 posts
  • # 115553

I am currently studying payroll and I came across an interesting thing and I am wondering if anyone can help me with this.

In the office where I work the payroll manager was putting the wages into the software (money soft) and he put £596 as the wage for this month for one of the employees and it came up as £661 NET.

He called in the employee and she said she had spoken to HMRC about a tax overpayment and they said they will take it off next month.

There was no new tax code issued and I have never even heard of such a tax code that does this and how did money soft know to do this.

Can anyone shed some light on this?

  • Member PM.Dip
  • Practice Licence
  • 397 posts
  • # 115559

Hi Yisgut

 

As you havent provided any information other than what the employee is earning this month I can only presume that the employee normally earns over £958 ish a month (£11,500 personal allowance /12).   Beacuase it is accumulative the employee pays tax on any earnings over this amount. However if the employee earns under this amount on any month they will get a tax rebate.  As the employeed earned £596 (£362 under the £958)  then they are refunded tax at the 20% they would have paid to date (my calculations approx £72 but yours shows £65 but near enough as you dont mention any NIC or pension values).

 

Hope that makes sense.

 

Regards

 

Liz

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