Overpaid salary, will Tax Free Allowance be affected?

Hi,

My wife is on maternity and her company do not pay salary while on maternity leave. However because of an administrative error by the paroll company she got paid in full for January. They have sent a letter looking for a cheque to be sent for the total amount of the overpayment.

If we send the cheque for the full amount will our Tax Free Allowance (or anything else I cant think of now) for the year be affected? Would it be better to work for free in August when she returns from maternity or does it not make any difference?

Thanks.

If I understand your post, they want your wife to send them a cheque for the gross payment whereas she only received the net payment (after tax, PRSI, levies, etc). This is nonsense.

One self-correcting way to adjust for the error is ask for your wife's written permission to process a negative taxable adjustment equivalent to the overpayment (there are alternatives, but this is probably one of the simplest).

No sorry about any confusion, they want my wife to send a cheque for the net payment, not the gross.
Thanks for your reply regarding the negative taxable adjustment, can you explain how this works pls or should I assume that her payroll dept will know how to do this?

We do this all the time. Payroll will reduce her record by the amount of the gross pay once they receive the net amount. They will also amned PRSI, tax, levy etc.

The suggestion that she delays being in Aug is also fine as it's the same tax year.

Sorry about my misinterpretation. I'm sure her payroll dept will know how to do this.

In simple terms, if your wife was paid 1,500 gross pay in error, the payroll calculated tax and other deductions on this basis. If they put through -1,500 (minus 1,500), refunds of tax and other deductions will be calculated, leaving her gross and net pay pretty much where they would have been if the erroneous payment had not been made. Any minor adjustments will be picked up when they reactivate her on the payroll when she returns after maternity leave.

I believe her employer will need her written permission to make the one-off deduction from her pay and your wife will need to agree to pay back the overpaid net pay. This can be once-off or over a number of months as suits her circumstances. AFAIK they cannot force her to make a single payment.