New guidance on tax refunds for negative earnings

HMRC has published new guidance for employers and employees on how to deal with tax refund claims where the employee has negative earnings. A negative earnings situation arises where the employee is required to pay back all or part of their earnings to their employer or former employer – typically as a result of a contractual clawback arrangement. The guidance confirms that individuals need to claim any tax back from HMRC rather than from the employer, either via self-assessment or by writing to HMRC.