Backpay Taxation

daRobot

Could do with a bit of advice on this:

My girlfriend had been in her job two months now, and for her first month due to her start date, she got no pay.

For the second month, she got the full two months, and consequently got taxed at the higher rate. I was sure that she'd be able to claim this back, but she said revenue told her that's not possible.

Is this correct? She's under the higher tax bracket on a yearly rate, so i'm extremely surprised that she doesn't get it back at some stage in the year.

Any advice on how to handle this would be greatly appreciated, as this this extra tax that was taken has further consequences in relation to payment of other bills.

namenotavailablE

The tax system works on a 'cumulative basis'. This means that over the full year, you receive the full benefit of the tax credits and cut-off point value due to you.

In your girlfriend's case, her net pay in future months will compensate for the high tax she paid in the first 2 months (effectively, she'll recover the excess 41% tax deducted in the first pay-check).

One thing to bear in mind is that in December she might (not able to say without the figures) be able to get a partial refund of the Universal Social Charge from the Revenue Commissioners. This could arise because in her first paycheck she might have paid the USC at the high rate (since she got 2 months in a single pay-check) without actually being liable for it when her income for the year could be below relevant thresholds.

daRobot

Thanks for that, very much appreciated.

dbran

Hi Darobot

Check to make sure that your gf is not on week one basis, or emergency tax. If you have the payslip it should say this somewhere. If it says cumulative then it should work out.

dbran