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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Employer returns: employer return - overpayments: notional overpayments

A notional overpayment arises where the agreed total net tax deducted or total net NIC payable is a minus amount.

This will occur when

  • The total tax refunded in the year by an employer has exceeded the total tax deducted by him or her in that year, for example CIS deductions suffered

Or

  • The sum of the total of statutory payments and NIC compensation on the statutory payments in the year has exceeded the total NIC deducted in that year

Note: A notional payment is to be shown because the repayment of the above does not attract any interest when it is repaid after the year end.

Three different examples of whole or part notional overpayments are shown below

Example 1

Total credits £4
   
Less P228 charge M £10
  -–-–-—-
Total overpayment £14
  -–-–-—-
Notional amount (£10)

 

Example 2

 

P35 = CIS deductions suffered £500
   
P228 charge M £500
  -–-–-—-
Total credits £Nil
  -–-–-—-
Total overpayment M £500
Notional amount (£500)

 

Example 3

 

P35 shows - tax due £100
   
P35 shows - NIC due £100
P35 shows - CIS deductions suffered £500
  -–-–-—-
P228 charge M £300
Total credits £200
  -–-–-—-
Total overpayment M £500
  -–-–-—-
Notional amount (£300)

Notes:

  1. The notional element of an overpayment is the amount that is not made up of credits.
  2. Credits may include, for example, payments or tax-free payments (incentives).