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HMRC internal manual

PAYE Manual

Reconcile individual: overpayments: overpayment tolerances

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Only repay in a case where the overpayment is below the tolerance if the individual claims it or asks for an informal tax calculation. Otherwise clear the year ‘Reconciled - Balanced’ if it has not already been cleared.

See ‘Tolerances’ at PAYE93075 for further instructions

Where the amount of the overpayment is less than the tolerance for overpayments (and the reconciliation was not triggered by a specific claim by the individual), an offsetting financial transaction will be posted to the individual’s account. This will result in a balanced account for the tax year.

Where the amount of the overpayment is greater than the tolerance, or the overpayment is the result of a specific claim by the individual, the overpayment will be passed for repayment by the issue of a payable order with a status of ‘Issue With Pre-Repayment Checks’.

Where the overpayment is calculated on or after 31 January following the end of the tax year reconciled, the End of Year Reconciliation function will have calculated the amount of Repayment Supplement due in respect of the repayment. This amount will be added to the overpayment to generate a single sum to be repaid on the payable order. The accounting records will, however, maintain the two items separately to ensure that the tax liability is balanced correctly.