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Posted Wed, 10 Aug 2022 14:24:52 GMT by s
Hello, My wife's employer is requesting the return of her contractual maternity pay due to a job change before return to her old role. They are requesting the total amount of her salary to be repaid this seems to include income tax, NI, pensions and student loan deductions. I am hoping someone can clarify if this would be correct or if we are just liable for the net received pay (her pay check minus statuary maternity pay)? Naturally even on repayment this throws up some issues with overpayments of tax from the previous tax year, how can we reclaim the tax owed post repayment from the previous tax year? Thanks for your help, Scott
Posted Fri, 12 Aug 2022 14:50:38 GMT by HMRC Admin 20
Hi scott richardson,

I think this may have been referred to Personal Tax mistakenly as ""Clawback / Negative Pay"", which does have a Personal Tax element to it.  
However, Occupational Maternity Pay is treated as an unintentional overpayment, and is not dealt with under the clawback/negative pay rules.
If the overpayment is discovered in year and the employee continues to be entitled to employment income, the employer should correct the error in the next FPS.
The employer can reduce their next payment to recoup any overpaid tax/NIC they had previously paid. They must keep a record to explain the reason for the adjustment.

They should advise the employee of the net difference overpaid and discuss how this will be paid back. The employee may choose to pay this directly to the employer or they may agree, with the employee, to recover the overpayment from future net salary.

It is important to note the amount the employee pays back is the difference in the net pay figures.

If the error is discovered after the 19th April and relates to the previous year, the employer will need to complete an EYU or an FPS. The employer should do the following:

· report the correct total payments and net tax for the year

· employer should make a note in their records to explain the reason for the EYU or FPS

· they should have proper arrangements in place to recover net pay from the individual and have evidence to demonstrate how the recovery was made or is being made (if they do not have this in place then they cannot amend their returns or claim back any tax/NIC)

· they must give their employee details of the amendment either in a letter showing the amendment or in a new P60 marked ‘REPLACEMENT’

Once HMRC has processed the EYU or FPS subject to any security checks, the overpaid tax will be available to be either set off against future liabilities or be repaid.

Thank you.

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