PAYE Refunds and Overpayments

If you've paid more PAYE or National Insurance than you owe, you can claim a refund from HMRC. This might happen due to payroll corrections, duplicate payments, or employees leaving that weren't reported correctly. Before claiming, you'll need to identify why the overpayment occurred and gather the relevant details about your business and the amount you're owed.

Who can claim a PAYE refund

You're eligible to claim a refund if you either:

• Have a credit showing in your business tax account (HMRC may write to tell you about this)
• Don't have a credit showing but believe you've overpaid

Before submitting a claim, you must work out why the overpayment happened by comparing what you've paid HMRC with what you actually owed according to your tax account.

Common reasons for PAYE overpayments

Payments that didn't account for:

Previous tax year adjustments:

• Overpayments carried over from an earlier tax year
• Statutory pay for parents (such as maternity or paternity pay) that you were entitled to reclaim from a previous tax year—note that this process doesn't cover advance funding for statutory pay in the current year
• Repayments you made to employees in previous tax years, for example because you used the wrong tax code—don't use this route for current year employee refunds
• Corrections to your reports
• Student loan deductions
• Employees who left but weren't reported correctly to HMRC
• Incentive payments from HMRC for sending reports online
• Construction Industry Scheme (CIS) deductions, or incorrectly made CIS deductions

Payment errors:

• Paying HMRC for the wrong tax year
• Paying more than once for the same bill
• Paying an estimated amount in advance

If you paid a duplicate amount or an estimate, you'll need to explain what you paid, what you should have paid, and why you paid the additional amount.

What if you need to refund an employee in the current year?

The PAYE overpayment refund process doesn't cover giving an employee a tax refund in the current tax year. If you need to make such a refund but can't afford it yourself, you can apply for financial help from HMRC.

Information you'll need for your claim

To make a claim, gather the following details:

Business information:

• Business name, telephone number and address
• Business bank account details for the repayment
• PAYE reference number

Claim details:

• The tax year you're claiming for (you can only claim for one tax year at a time)
• Estimated overpayment amount
• Explanation of why you overpaid

If offsetting against other taxes:

If you want HMRC to deduct your repayment from other amounts you owe, provide:

• For Corporation Tax: your Corporation Tax unique tax reference
• For VAT: your VAT registration number
• For other liabilities: the type of charge and any reference numbers

Additional requirements for director-related claims:

HMRC may request further details if your claim relates to a company director, including:

• Business bank statements
• Personal bank statements
• Shareholder minutes

If claiming on behalf of a client:

If you want HMRC to pay an agent or other nominated representative, submit a completed form R38 or signed authority with your claim.

How to make your claim

Claiming online

You can submit your claim online through HMRC's digital service. You'll need to sign in using your Government Gateway details—if you don't have these, you can create them when you sign in for the first time.

Agents should use their agent services account sign-in details. If you're an agent without an agent services account, you'll need to create one before claiming.

Remember: you can only claim for one tax year at a time when claiming online.

Claiming by post

If you can't claim online, send a written request to HMRC marked 'Employers PAYE Overpayment' with all the required information listed above.

Send your claim to:

PT Operations North East England

HM Revenue and Customs

BX9 1BX

United Kingdom

What happens after you submit your claim

HMRC will review the details you've provided and contact you either to:

• Confirm your claim has been accepted
• Ask for additional information or supporting evidence

How refunds are processed

HMRC doesn't automatically send you a cheque. Instead, they will:

1. First, offset the amount against your current tax year PAYE bill

2. If you don't owe anything for the current year, offset it against a PAYE bill from a previous tax year

3. Then offset it against other taxes you owe, such as Corporation Tax

You'll only receive a cash refund if you don't owe HMRC any tax at all.

If your claim is accepted, HMRC will send you details about:

• When to expect your refund
• Any changes to your refund amount
• Any liability payments they make using the refund

For information about how long HMRC will take to respond to your claim, you can check HMRC's guidance on reply times.

Sources

• Claim for a refund if you've paid HMRC too much on your PAYE bill

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.