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underpaid for several years? How will I be taxed?

  • 04-12-2012 9:19pm
    #1
    alexanderomahon
    Registered Users, Registered Users 2 Posts: 601 ✭✭✭


    I have just discovered I was underpaid for the last several years. This was due to an error on my employers side which they have agreed to rectify.

    My question is how will I be taxed on the back pay I will receive? Will I be taxed at the higher rates of taxation that now exist, or will they look at the tax/PRSI/etc laws that existed in the various years that I was underpaid?


Comments

  • #2
    maddragon
    Registered Users, Registered Users 2 Posts: 590 ✭✭✭maddragon


    This is not definitive but something similar happened in my case a few years ago when the income levy was in place. I was given back pay for 5 years and the income levy was applied to it even though the pay was in respect of a time when there was no income levy in existence.


  • #3
    alexanderomahon
    Registered Users, Registered Users 2 Posts: 601 ✭✭✭alexanderomahon


    maddragon wrote: »
    This is not definitive but something similar happened in my case a few years ago when the income levy was in place. I was given back pay for 5 years and the income levy was applied to it even though the pay was in respect of a time when there was no income levy in existence.

    Did you query this at the time?


  • #4
    Wils110
    Closed Accounts Posts: 548 ✭✭✭Wils110


    You shall be taxed on whatever rates are in at the time, are you going to get it in a lump sum or every week


  • #5
    alexanderomahon
    Registered Users, Registered Users 2 Posts: 601 ✭✭✭alexanderomahon


    Wils110 wrote: »
    You shall be taxed on whatever rates are in at the time, are you going to get it in a lump sum or every week

    I believe it will be a lump sum.


  • #6
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,690 Mod ✭✭✭✭Stheno


    alexanderomahon wrote: »
    I believe it will be a lump sum.

    Will be taxed in the year in which it is paid, you could negotiate with your employers so that you end up with the pay you would have gotten based on previous years personal tax rates, means they may have to pay you more, especially if the lump sum pushes you from the 20 - 41% rate.


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  • #7
    maddragon
    Registered Users, Registered Users 2 Posts: 590 ✭✭✭maddragon


    alexanderomahon wrote: »
    Did you query this at the time?

    I did indeed, both through my employers payment section and with revenue and the answer they have me was that any income you receive is taxed at current rates.


  • #8
    Wils110
    Closed Accounts Posts: 548 ✭✭✭Wils110


    Work out is it cheaper to be payed it with your pay packet every week/month I had a similar incident I asked for it weekly worked out better for me


  • #9
    Itchianus
    Registered Users, Registered Users 2 Posts: 230 ✭✭Itchianus


    This comes up now and again.

    The employer is obliged under the PAYE regulations to operate PAYE/PRSI/USC deductions on the pay in the period when it is being paid.

    However there is long established case law that emoluments (i.e. PAYE salary) are assessable to tax in the period to which they relate.

    While it may be a pain in the arse you'll need to get onto the tax office to get this one sorted, but it should be worth your while.


  • #10
    Wils110
    Closed Accounts Posts: 548 ✭✭✭Wils110


    Btw how did it take you 7 years to find out


  • #11
    alexanderomahon
    Registered Users, Registered Users 2 Posts: 601 ✭✭✭alexanderomahon


    Wils110 wrote: »
    Btw how did it take you 7 years to find out

    I'd sent all my details in to my employer years ago and assumed everything was ok. Then had a colleague who had a problem and so looked into my own situation. Compared my wage packet with a colleague who had started at same time as me, with same qualifications etc, and found the problem.


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