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Correcting PAYE Payments to HMRC

The process for fixing a payment after you paid HMRC the wrong amount depends on whether you overpaid or underpaid, and what caused the error.

Information in this guide may help you correct some of the common problems when running payroll and avoid having to contact HMRC's employer helpline.

Fixing Errors after Paying HMRC Too Much

Did an overpayment occur because of a mistake in your Full Payment Submission (FPS) or Employer Payment Summary (EPS)?

If so, you can make the correction in the next regular report that you send. HMRC will deduct the overpaid amount from your next PAYE bill.

Likewise, you can balance your next PAYE bill (pay less) if you entered the wrong amount when you paid HMRC or you made a duplicate payment.

HMRC can make a direct repayment into your account if you sent an EPS containing your bank details. If not, you would need to send a letter to HMRC informing them of your bank details.

Note: If you overpaid because of a mistake in your FPS or EPS, you can also contact the HMRC helpline to claim a refund (see the information below).

Reclaiming an Overpayment (previous tax years)

The reason why you overpaid HM Revenue and Customs is going to determine how to reclaim an overpayment for a previous tax year.

You can work out why you overpaid by comparing the overpayment to the amount owed in your tax account. In most cases, paying too much is likely to occur if you failed to account for:

  • An overpayment carried over from a previous tax year.
  • Statutory pay for parents (learn how to get financial help with statutory pay).
  • Repayments made to employees (e.g. using the wrong tax code).
  • Corrections to your reports.
  • Student loan deductions.
  • Employees who left your employment (e.g. you failed to report them correctly to HMRC).
  • Incentive payments from HMRC to send reports online.
  • Construction Industry Scheme (CIS) deductions (or you made incorrect deductions).

Note: Another section explains what you must do as a Construction Industry Scheme (CIS) contractor and how to file returns.

There are several other common reasons why employers need to correct overpayments to HMRC, such as:

  • Paying the same bill more than one time.
  • Making an advance payment for an estimated amount.
  • Using the wrong tax year.

It is important to inform HMRC of the amount you paid, what you should have paid, and the reason why you paid the extra amount, for duplicated or estimated payments.

How to Claim a Repayment from HMRC

Having worked out why you overpaid, you can then make a claim for your repayment. Some of the information you need to supply will include:

  • Your business name and address (including a contact telephone number).
  • The amount that you overpaid and why it happened (relating to each tax year) and the tax month you made the overpayment (if known).
  • Whether you already made a claim for this particular overpayment on a previous occasion.
  • Your PAYE reference (found in your employer registration letter sent by HMRC).

Following that, HM Revenue and Customs will offset the overpayment against any relevant amounts owing in your PAYE bill for the current tax year.

If nothing is owing, they will offset the amount against (either):

  • A PAYE bill from a previous tax year.
  • Other forms of taxation that you need to pay for (e.g. Corporation Tax).

HMRC only makes refunds to employers who do not owe money for any other taxes. Companies that have been dissolved or struck off would need to apply for a refund by letter.

HMRC Employer Helpline
PT Operations North East England
HM Revenue and Customs
United Kingdom

Telephone: 0300 200 3200
Outside UK: +44 151 268 0558
Fax: 03000 523 030
Monday to Friday: 8am to 4pm
Closed weekends and bank holidays

Fixing Errors after Paying HMRC Too Little

Did you underpay HMRC because of a mistake you made in your Full Payment Submission or Employer Payment Summary? If so, you can correct it in your next regular report and have it added to your next PAYE bill.

Was the reason you underpaid because of a wrong entry when paying HMRC? If so, you should pay the balance without delay (using your Accounts Office reference) to avoid having to pay interest or a financial penalty.

Adjusting Payroll Payments after Paying the Wrong Amount