Can I Claim a Refund If I’ve Overpaid PAYE

Overpaying PAYE is more common than most people realise. Whether you are employed, a director of your own limited company, working multiple jobs or moving between roles during the tax year it is very easy for tax to be deducted incorrectly. In my opinion PAYE looks simple on the surface although HMRC’s real time systems are far from perfect. I regularly see people who have paid too much tax simply because their tax code was wrong or their employer used incomplete information.

The good news is that you can claim a refund if you have overpaid PAYE and the process is usually straightforward once you understand what HMRC needs. This guide explains how PAYE overpayments happen, how HMRC works out if you have overpaid, the different ways to claim a refund, how long it takes and the common mistakes that stop refunds from being paid.

By the end you will know exactly what to do if you think you have paid too much tax and how to get your refund as quickly as possible.

Understanding PAYE and Why Overpayments Happen

PAYE is the system employers use to deduct:

Income Tax
National Insurance
Student Loan repayments
Pension contributions

from your salary before you are paid. It is designed to collect the right amount of tax each month although this depends entirely on your tax code being correct.

PAYE overpayments usually happen because:

Your tax code was wrong
You had multiple jobs
You left a job mid year
You were on emergency tax
Your employer did not receive your P45 in time
You earned less than expected across the year
Your benefits in kind were removed or changed
You repaid a salary overpayment
You stopped working and had no taxable income for the rest of the year

In my opinion the biggest cause is incorrect tax codes. HMRC issues millions of tax codes each year and the system sometimes pulls incomplete data from employers, especially when you change jobs.

What Counts as an Overpayment of PAYE

You have overpaid PAYE if:

Your employer deducted more Income Tax than required
Your tax code included deductions that no longer apply
You paid tax on earnings that should have been tax free
Your earnings dropped but your tax code did not update
You did not earn enough across the year to use your full personal allowance
Your employer put you on the wrong tax code
You had multiple employers but were treated as having one main job

PAYE is calculated on a cumulative basis unless you are on a Week 1 or Month 1 code. This means the system adjusts tax automatically throughout the year if your income changes. However if you leave a job or do not work enough for the cumulative system to correct itself you can end up with a genuine overpayment.

How to Check Whether You Have Overpaid PAYE

You can check using:

Your payslips
Your P45
Your P60
Your online HMRC personal tax account

Your P60 shows how much you earned and how much tax you paid for the whole tax year. If the tax paid seems too high compared with your income it may indicate an overpayment.

In my opinion your HMRC tax account is the easiest place to see if something looks wrong because it shows:

Your tax code
Your employment history
Your pay reported by employers
Your tax paid
Any refunds due

If anything looks unusual, such as a job still showing as active after you left, this can cause incorrect tax codes and potential overpayments.

Common Situations Where PAYE Refunds Happen

1. You started a new job without giving your employer a P45

Your employer will put you on an emergency tax code until HMRC updates it. This usually leads to excessive tax deductions.

2. You worked more than one job at the same time

PAYE assumes only one job uses your personal allowance. If both employers used it you may underpay. If neither used it you may overpay.

3. You stopped working before the end of the tax year

If you leave employment mid year you may not have used your full personal allowance. HMRC may owe you money.

4. Your benefits in kind changed or were removed

Tax codes are often slow to adjust and you may pay too much tax until HMRC corrects it.

5. You were paid statutory benefits such as sick pay or maternity pay

Statutory payments can cause PAYE miscalculations, especially if your income drops suddenly.

6. Your employer corrected previous payroll errors

Reversals or adjustments may produce temporary overpayments.

7. You repaid a salary overpayment

PAYE may not update automatically unless payroll reprocesses the correction properly.

In my experience the most common refund scenario is simply changing jobs.

How to Claim a Refund for Overpaid PAYE

There are four main ways to claim depending on your situation.

1. Claiming Online Through Your HMRC Personal Tax Account

This is the simplest and fastest way for most people. Log in using your Government Gateway account and HMRC will show:

Whether you overpaid
The amount due
Your refund options

If HMRC has already calculated your overpayment you can usually request the refund instantly.

2. Using Form P50 If You Have Stopped Working

Use this if:

You have stopped working
You do not expect to work again in the same tax year
You are not receiving Jobseeker’s Allowance

Form P50 allows you to claim a refund before the end of the tax year.

3. Your Employer Corrects Payroll and Issues the Refund

If the issue is due to payroll error or late information your employer may:

Reprocess your pay
Update your tax code
Issue a refund through payroll

This is often the fastest method during the tax year.

4. HMRC Automatically Issues a Refund After the Tax Year Ends

If HMRC calculates that you overpaid tax they will issue:

A P800 tax calculation
A simple assessment
A refund notification

This usually happens between June and October after the end of the tax year.

In my opinion relying on HMRC to spot the overpayment is possible although it is not always quick. If you want the money sooner claim it yourself.

How Long Does a PAYE Refund Take

Refund time depends on how you claim.

Online refund via HMRC account: 5 to 10 working days
Form P50: up to 6 weeks
Employer payroll correction: next available payroll run
Automatic refund from HMRC: several weeks to several months

Delays usually happen when HMRC needs to verify details such as employment history or identity.

What Information You Need to Claim Your Refund

You may need:

Your National Insurance number
Your P45 or P60
Payslips
Your Government Gateway login
Employer details
Dates you started or left work
Corrected tax codes
Any information HMRC requests

Having your documents ready speeds up the process.

What Happens After You Submit a Claim

Once HMRC receives your claim they will:

Review your tax code
Compare your income to their records
Check if your employer has submitted correct payroll data
Determine if you have overpaid
Issue a refund or request more information

Refunds are usually paid:

Directly to your bank account
By cheque if HMRC cannot verify your bank details

In my experience bank transfers are much faster and more reliable.

Situations Where You May Not Be Entitled to a Refund

You may not receive a refund if:

You changed jobs but did not overpay across the full tax year
Your employer used the correct code
You repaid a salary overpayment incorrectly
HMRC records show income not yet included in your calculation
You have outstanding tax debts
You owe HMRC money from a different tax year

A common misunderstanding is that a single payslip with high tax automatically means you have overpaid. You might still be on track once the full year is considered.

Real World Examples of PAYE Refund Situations

Example 1: You left a job in December

You earned £12,000 for the year although your tax code assumed you would earn £24,000. PAYE would have deducted too much tax. You are eligible for a refund.

Example 2: You had two part time jobs

Neither employer used your personal allowance. Both taxed you at 20 percent. You can reclaim the unused allowance through HMRC.

Example 3: You started a new job and your employer taxed you on an emergency code

You may have 1257L W1 or similar on your payslip. Once HMRC updates your code you can reclaim the excess.

Example 4: You changed roles and your benefit in kind ended

Your code still included the benefit for several months which caused an overpayment. HMRC should adjust this and refund the difference.

Example 5: Your employer made a payroll mistake

Payroll recalculates your tax and issues a refund through your next salary.

PAYE Refunds for Company Directors

Directors often overpay via:

Incorrect annual earnings method
Multiple employments
Dividends and salary combinations
Late adjustments for benefits

Directors usually reclaim overpaid PAYE through:

Self Assessment
End of year payroll reconciliation
HMRC refund calculation

In my opinion directors should always check their year to date figures because PAYE for directors is calculated differently from normal employees.

How to Avoid PAYE Overpayments in Future

Keep your tax code up to date
Check every payslip
Give your P45 to new employers promptly
Update HMRC if your circumstances change
Check your personal tax account regularly
Avoid assuming payroll is always correct
Review benefits in kind each year

In my experience the easiest way to prevent problems is simply to check your tax code whenever anything changes.

When You Should Call HMRC

You should contact HMRC if:

Your online account shows incorrect employment
Your employer has submitted the wrong payroll information
Your P60 or P45 figures look wrong
Your refund is delayed
You cannot access your personal tax account

Have your NI number and employer details ready.

Conclusion

Yes you can claim a refund if you have overpaid PAYE and in many cases the refund is automatic once HMRC reviews your income. Overpayments usually happen when tax codes are wrong, when employment circumstances change or when payroll information is incomplete. The refund process depends on whether you are still employed, have left work, changed jobs or are dealing with a payroll correction.

In my opinion the easiest and fastest way to claim is through your HMRC personal tax account because it gives you instant visibility of your tax position and allows you to request refunds directly. With the right information and a bit of patience most PAYE overpayments can be resolved quickly and without stress.