Changes to the Personal Allowance to take effect on 7 September may result in some employers having to refund tax to employees. If necessary, employers can claim funding from HMRC to cover the cost of these refunds.

Increases to the 2008–09 Personal Allowance will take effect on 7 September and will be backdated to 6 April. This will involve tax code changes for many individuals, and many employees will have less tax to pay for the remainder of the tax year.

Some employees may be entitled to a refund of tax already paid so far this year. The usual procedure is for the employer to fund any such refunds out of other PAYE deductions by reducing the next payment to HMRC. However, if the employer's next payment is insufficient to cover the employee refund(s), then the employer can claim funding from HMRC to cover the balance.

The rules that apply, and the steps involved in claiming funding, are outlined at http://www.hmrc.gov.uk/employers/payefunding.htm