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HMRC internal manual

PAYE Settlement Agreements

Dealing With PAYE Settlement Agreements: Repaying overpaid tax and Class 1B NICs

When you become aware that an employer has overpaid PSA tax and/or Class 1B NICs you must arrange for a repayment to be issued to the employer as soon as possible.

In all cases

  • review the papers to satisfy yourself that no additional charge arises, if so amend the PSA  
  • check whether an additional charge to the PSA should be made see PSA1190 
  • amend the SAFE charge to generate the repayment, see PSA2070

Time limits 

Repayments of overpaid PSA tax fall within Schedule 1AB Taxes Management Act 1970 which state that any claims must be within 4 years of the end of the tax year to which the claim (overpayment) relates.

Repayments of Class 1B NICs fall within Regulation 52, Social Security (Contributions) Regulations 2001 which cover all Class 1 NICs. The time limit for making a repayment claim for these contributions is covered in the National Insurance Manual at NIM37703.