DSP Illness Benefit

Yellow1

Hi All,

I just found out from Revenue that I underpaid tax by €630 in 2013. I had to take 8 weeks off work in the summer of 2013. During this time I was paid illness benefit. My employer then deducted the amount of illness benefit I received from my wages so it was all evened out and I didn't get any extra so to speak.

When I asked my employer why I'm now owing €630 to Revenue they said that illness benefit is now taxable and I should have contacted Revenue when I was out sick and asked them to alter my tax credits. As I didn't it has only come to light now that I wasn't taxed on this illness benefit so I owe it now.

I'm totally at a loss to what's going on. I don't understand why I have to pay tax on something I didn't earn ie: I simply got paid by my employer for my sick days as I'm entitled to (ok Revenue paid me a bit and my employer deducted that from my pay) and I didn't get paid any extra so why is this considered extra earnings?

Is this correct? Sorry if I'm being a complete dunce about this. I just don't think it's fair but maybe that's just the tax man

Many thanks

2ndcoming

There's a chance you may not owe it but it will depend on your employer having included the illness benefit in your pay for tax purposes on your P60, you will have to find this out from them (although it sounds like they didn't).

It sounds like your employer did the following (figures just used for example):

Pay 400
less illness ben 220

taxable pay 180

As such you would have paid too little tax while you were on illness benefit and would have to have got your credits adjusted down accordingly when you went back to work. You could check a payslip from the period to confirm.

Alternatively they could have adjusted your pay down e.g.

Pay 180
+ Illness ben 220

taxable pay 400

This way everything would have been fine and you would have paid the tax at the time.

Illness benefit may not be earned income but it is income at the end of the day, if you didn't get it you'd have less money while off sick.

Yellow1

2ndcoming wrote: »

There's a chance you may not owe it but it will depend on your employer having included the illness benefit in your pay for tax purposes on your P60, you will have to find this out from them (although it sounds like they didn't).

It sounds like your employer did the following (figures just used for example):

Pay 400
less illness ben 220

taxable pay 180

As such you would have paid too little tax while you were on illness benefit and would have to have got your credits adjusted down accordingly when you went back to work. You could check a payslip from the period to confirm.

Alternatively they could have adjusted your pay down e.g.

Pay 180
+ Illness ben 220

taxable pay 400

This way everything would have been fine and you would have paid the tax at the time.

Illness benefit may not be earned income but it is income at the end of the day, if you didn't get it you'd have less money while off sick.

Thanks for the reply. So the fact that illness benefit is taxable means you don't get full pay when you're off sick for more than 3 days now? Because If they tax it you come out with less than your normal pay

allthedoyles

Getting full pay and Illness benefit is a matter between you and your employer .

The fact that Illness benefit is taxable is different case .

At this stage you need to check your P60 figures against your P21 balancing statement , as there have been many mistakes made in the past , especially if you applied for balancing statement online .