Illness Benefit - Taxation - Employer

bungo10

Hi, I'm self employed and between book keepers at the moment. Doing all wage stuff myself and a bit out of my depth! One of my employees is pregnant and out on illness benefit for the past 3-4 weeks for the foreseeable future, I got a letter from revenue today advising that her illness benefit is taxable. She is not being paid by us while she is out and is getting €188 from the DSP. What am I suppose to do with this information?? Any help would be much appreciated!

Citizenpain

any help?
http://www.revenue.ie/en/tax/it/leaflets/it22.html

bungo10

Thanks citizenpain. This part applies to me...... "If your employer does not pay you and you retain your Illness Benefit, your employer will still be notified of the amount of taxable Illness Benefit you receive and will include this amount in their on-going payroll calculations.e "

I'm just wondering how I include it in my on-going payroll calculations? I use the Thesaurus software for my payroll.

Thanks

Citizenpain wrote: »

any help?
http://www.revenue.ie/en/tax/it/leaflets/it22.html

Citizenpain

check the employers guide to PAYE

http://www.revenue.ie/en/business/paye/guide/employers-guide-paye-calculation.html#section11

ibarelycare

On Thesaurus, you go to Payslips > Weekly Input and then go to the Illness Benefit tab across the top. You should be putting the employee's pay in as zero in the normal tab, and then in the IB tab enter the amount she is receiving each week. The employee's taxable pay will be increased by this amount, but will not be subject to PRSI or USC.

bungo10

Thanks for the replies! ibarelycare can i ask....her IB is running from 20th July so will I have to reverse the last few payment updates in thesaurus and redo them to include her IB or can our accountant do this with the P35's at the end of the year? I could ask him but its impossible to get hold of him this time of year. Thanks again

ibarelycare wrote: »

On Thesaurus, you go to Payslips > Weekly Input and then go to the Illness Benefit tab across the top. You should be putting the employee's pay in as zero in the normal tab, and then in the IB tab enter the amount she is receiving each week. The employee's taxable pay will be increased by this amount, but will not be subject to PRSI or USC.

ibarelycare

bungo10 wrote: »

Thanks for the replies! ibarelycare can i ask....her IB is running from 20th July so will I have to reverse the last few payment updates in thesaurus and redo them to include her IB or can our accountant do this with the P35's at the end of the year? I could ask him but its impossible to get hold of him this time of year. Thanks again

I imagine the accountant can do it all in the P35, however then you will not know how much tax the employee is due to pay/be refunded when she gets back to work. In that case you should probably place her on a Week 1 basis, and then she will have to request a P21 balancing statement in January. So if it's not too difficult, it might be best to reverse the payroll back to 20th July.

Sorry I can't give you a more concise answer, I'm sure someone else will be able to! If not, you might try the Thesaurus helpline, I always find them quite good. 01 8352074.

BPJen

Hi,

I work in Thesaurus / Bright Pay,

Ibarleycare is correct in that you still need to record the DSP benefit, regardless of wheither you are paying the employee while out or not. Since the 1st of January this year, the onus has been pushed onto the employer in the sense that once the employee is out sick for more than 3 days the employer "has to assume" they will be in receipt of the Illness Benefit, therefore they would start to record and deduct the PAYE from the Benefit as soon as.
However, as Revenue are only interested in the PAYE portion, what I would suggest you do is record the Illness Benefit for the weeks that have been left out, after the employee returns. So, for example, your employee returns at the end of August, but the Illness benefit had not been recorded for the first 4 week of the absence, then just record it until the 4 weeks have been covered, i.e until the end of September. Pay the employee normally when they return but just don't remove the Illness Benefit until it has all been accounted for for PAYE purposes.

I hope this helps.
Thank you for your kind comments Ibarleycare, much appreciated.

ibarelycare

BPJen wrote: »

Hi,

I work in Thesaurus / Bright Pay,

Ibarleycare is correct in that you still need to record the DSP benefit, regardless of wheither you are paying the employee while out or not. Since the 1st of January this year, the onus has been pushed onto the employer in the sense that once the employee is out sick for more than 3 days the employer "has to assume" they will be in receipt of the Illness Benefit, therefore they would start to record and deduct the PAYE from the Benefit as soon as.
However, as Revenue are only interested in the PAYE portion, what I would suggest you do is record the Illness Benefit for the weeks that have been left out, after the employee returns. So, for example, your employee returns at the end of August, but the Illness benefit had not been recorded for the first 4 week of the absence, then just record it until the 4 weeks have been covered, i.e until the end of September. Pay the employee normally when they return but just don't remove the Illness Benefit until it has all been accounted for for PAYE purposes.

I hope this helps.
Thank you for your kind comments Ibarleycare, much appreciated.

.


No problem! I actually have a question for you myself, because I haven't run any IB for any staff since it became taxable. If an employee is out for 3 weeks, for example, and receives IB for those weeks. I would document the €188 each week through the payroll. Depending on how much the employee usually earns, they will either be due a refund, or will owe tax on each of those 3 weeks. Say they were due a refund of €10 for each week, and then on their first week back (week 4) they are back to their normal week's pay...should the employer just give them their 4 payslips that week, and make one payment (weeks 1-3 tax refund + week 4 net pay)?

BPJen

ibarelycare wrote: »

.


No problem! I actually have a question for you myself, because I haven't run any IB for any staff since it became taxable. If an employee is out for 3 weeks, for example, and receives IB for those weeks. I would document the €188 each week through the payroll. Depending on how much the employee usually earns, they will either be due a refund, or will owe tax on each of those 3 weeks. Say they were due a refund of €10 for each week, and then on their first week back (week 4) they are back to their normal week's pay...should the employer just give them their 4 payslips that week, and make one payment (weeks 1-3 tax refund + week 4 net pay)?

Hi,

As the tax is being accounted for straight away now, the method for calulating PAYE does not change as it used to ( from Cummulative to week 1 basis ) So the system looks at each week on an individual basis and presumes that any tax due or refund of tax is to be paid /deducted on that particular week.

In this regard you have 2 options ;

1: As soon as the IB is present and to be deducted, put the employee on a week 1 basis until they return or the IB ceases. In this way any refunds will only appear on the week that the employee returns - when you put them back on cummulative basis.

2: Record the refund amounts and add them as a non-taxable addition when the employee returns on week 4

The issuing of payslips is entireley up to you as an employer. If you print payslips, it is unlikely that a sick employee will come in each week to collect a zero payslip, so they normally would receive a batch on return to work or on receipt of their next weeks payslip. If you email the payslips, you could send them the zero payslips every week, but again this is up to you and the company policy.
When the employee returns, I would be inclined to give 1 payment but with 4 payslips.

ibarelycare

BPJen wrote: »

Hi,

As the tax is being accounted for straight away now, the method for calulating PAYE does not change as it used to ( from Cummulative to week 1 basis ) So the system looks at each week on an individual basis and presumes that any tax due or refund of tax is to be paid /deducted on that particular week.

In this regard you have 2 options ;

1: As soon as the IB is present and to be deducted, put the employee on a week 1 basis until they return or the IB ceases. In this way any refunds will only appear on the week that the employee returns - when you put them back on cummulative basis.

2: Record the refund amounts and add them as a non-taxable addition when the employee returns on week 4

The issuing of payslips is entireley up to you as an employer. If you print payslips, it is unlikely that a sick employee will come in each week to collect a zero payslip, so they normally would receive a batch on return to work or on receipt of their next weeks payslip. If you email the payslips, you could send them the zero payslips every week, but again this is up to you and the company policy.
When the employee returns, I would be inclined to give 1 payment but with 4 payslips.

That's brilliant, thanks a million

bungo10

BPJen, that makes perfect sense thanks!
However, she is due to take maternity leave on the 4th of October and I don't think she'll be back to work before then so it looks like it will be April 2014 before she comes back. Should I just start recording the IB from this week and let the accountant sort out the missing 3 weeks or reverse the last 3 weeks payslips??

Thanks again!!

BPJen wrote: »

Hi,

I work in Thesaurus / Bright Pay,

Ibarleycare is correct in that you still need to record the DSP benefit, regardless of wheither you are paying the employee while out or not. Since the 1st of January this year, the onus has been pushed onto the employer in the sense that once the employee is out sick for more than 3 days the employer "has to assume" they will be in receipt of the Illness Benefit, therefore they would start to record and deduct the PAYE from the Benefit as soon as.
However, as Revenue are only interested in the PAYE portion, what I would suggest you do is record the Illness Benefit for the weeks that have been left out, after the employee returns. So, for example, your employee returns at the end of August, but the Illness benefit had not been recorded for the first 4 week of the absence, then just record it until the 4 weeks have been covered, i.e until the end of September. Pay the employee normally when they return but just don't remove the Illness Benefit until it has all been accounted for for PAYE purposes.

I hope this helps.
Thank you for your kind comments Ibarleycare, much appreciated.

BPJen

Good morning,

What I would do is start recording the IB from this week, but instead of recording the weekly amount (std amount per week is 188) increase it by whatever has not been recorded.
Lets say they are due to get IB of the std. €188 per week, but 4 weeks have already been missed. I would increase the IB to be deducted each week until the €752 (188 x 4) has been accounted for. So instead of €188 each week I would record IB of €376 for 4 weeks. This then covers the 4 weeks that were missed and the IB for those weeks aswell.

I hope that makes sense. I do feel your best to try and get the IB sorted before you reach year end. It can just cause more confusion if left until later in the year.

bungo10

BPJen, thank you so so much for your reply and I will so exactly that tomorrow when I get into the office. This is my first time using boards.ie and I can't believe how helpful people are!

Thanks again to everyone for all the replies!!

BPJen wrote: »

Good morning,

What I would do is start recording the IB from this week, but instead of recording the weekly amount (std amount per week is 188) increase it by whatever has not been recorded.
Lets say they are due to get IB of the std. €188 per week, but 4 weeks have already been missed. I would increase the IB to be deducted each week until the €752 (188 x 4) has been accounted for. So instead of €188 each week I would record IB of €376 for 4 weeks. This then covers the 4 weeks that were missed and the IB for those weeks aswell.

I hope that makes sense. I do feel your best to try and get the IB sorted before you reach year end. It can just cause more confusion if left until later in the year.