Two pays in one month - what to do

CptSternn

Hi.

I am hoping someone can help me here.

I was a contractor working for a company for a few months and when my contract finished the company took me on full time. Now, the issue is my contracting company pays out on the 15th of the following month and the company itself pays out on the 25th of the same month.

Therefore my first month as a full time worker I got paid on the 15th for the previous month and then again on the 25th of the month.

And then I got hit with an obscene amount of tax. The first pay was ok, but due to the fact the second pay was in the same month the government took about 52% of it, so I lost a sizable amount I normally would not have due to the fact the pay times overlapped.

Now, normally I would think they could go back and calculate it based on months to fix this but to add into the mix I started in December and my first pay was January 15, even if they try and calculate it by month I am missing a months worth of tax credits and it doesn't help with the monthly cut off rate.

Any ideas or is that money just gone now? I got a months pay that is less than half of what I normally take home because of this. It's crazy to think I will be penalized so severely for accepting full time work.

CIARAN_BOYLE

probably your pay will equalise over the rest of the year as any excess tax credits and cut off goes back earlier in the year.

thesimpsons

I'm struggling to understand this. If you get paid fortnightly then your employer should have allocated your annual allowances and credits into fortnightly allocations same as weekly pay would. First thing is to check wit your payroll office and ask them for clarification.

Starting a job in one tax year and first payment in the subsequent tax year is irrelevant. The date of your wages payment is the date used to determine tax credits/allowances going forward. You were not entitled to any credits for December 2013.

CptSternn

Ok, let me simplify my summary -

Lets say I started work as a contractor on December 1st of 2013. I then on January 1st of 2014 I am made full time at the same company. The contracting company pays out on the 15th of the next month, which would be January 15th 2014. The company itself I now work full time for pays out on the 25th of the month, before the month ends. That means I get my wages for December 2013 in January AND my January wages in the same month.

Therefore I am double taxed as if I was working two jobs, even though I am not. My Tax credit for December 2013 is not applied at all and yet I am hit with an excessive amount of tax due to two pay periods in one month.

CIARAN_BOYLE

Request a P21 balancing statement for 2013 and you will gain any benefit from December tax credits available on 2013 income.

All you can do really.

CptSternn

Thanks!

barneystinson

STOP!!

@CiaranBoyle, prepare to have your mind blown:

S.112(2)(b) TCA97 provides that where a charge to tax under Schedule E arises, and the office/employment under which it arises is no longer held, then the tax is to be charged for the last year of assessment in which the employment was held.

In other words, if I understand the OP's situation correctly and they were given a P45 dated 31/12/2013 by their contracting intermediary, because they were commencing as a direct employee on 1/1/14, then they can go to revenue and ask to have the salary that was paid in January but which relates entirely to 2013, assessed as 2013 income.

In dealing with it, Revenue should also amend his tax credits/cut-off for 2014 so that they are fully available for use in the 2014 employment.

CptSternn

Alas, it appears I will be out a substantial amount of money and there is nothing they can do.

My current employer says this is a problem that happened before they took over payroll so they cannot help.

My previous contracting company says the books are closed for 2013 and there is no way to go back and change things.

The Revenue says I got two pay slips in one month and no matter what the circumstance even if it was because of work in 2013 and that it was just a reshuffle of the pay schedule I still am taxed like I have two jobs.

So I got paid twice in one month from the same job because I went full time and they took half of a months pay for tax I normally would not be responsible for.

Sickened.

Greenmachine

It will balance out of the year. As far as PAYE is concerned. Unfortunately any overage in PRSI is not refundable.

CptSternn

barneystinson wrote: »

STOP!!

@CiaranBoyle, prepare to have your mind blown:

S.112(2)(b) TCA97 provides that where a charge to tax under Schedule E arises, and the office/employment under which it arises is no longer held, then the tax is to be charged for the last year of assessment in which the employment was held.

In other words, if I understand the OP's situation correctly and they were given a P45 dated 31/12/2013 by their contracting intermediary, because they were commencing as a direct employee on 1/1/14, then they can go to revenue and ask to have the salary that was paid in January but which relates entirely to 2013, assessed as 2013 income.

In dealing with it, Revenue should also amend his tax credits/cut-off for 2014 so that they are fully available for use in the 2014 employment.

That was an example, but in my actual case I started in March and got two pay slips in March, same principle. The problem arises as the pay I got in January was from December. My P45 was issued in March, so would this still apply?

barneystinson

CptSternn wrote: »

That was an example, but in my actual case I started in March and got two pay slips in March, same principle. The problem arises as the pay I got in January was from December. My P45 was issued in March, so would this still apply?

You're out of luck so - the provision I referenced to relates specifically to where a payment is received in a year where you no longer hold the employment that it relates to. You were still in that employment in 2014, so unfortunately it would appear you're goosed.

It's a swings and roundabouts thing though, and it'd work out in your favour if you got let go in a couple of months, because you'd have more tax paid this year to claim back - but I know that's no consolation to you in your circumstances.

And to the people who keep saying it'll balance out over the year, ye are obviously not thinking it through properly...

allthedoyles

If your monthly payday is 15th , then your actual monthly salary received in January 15th relates to January 2014 .
In this case your tax year ended on 15th December 2013 .

So the income earned from 15th Dec-31st Dec is 2014 income .

If you send a copy of your P45 to the tax office and include an estimate of your earnings for 2014 , your tax credits can be allocated correctly , and it will work itself out over the year 2014 .

Alan Shore

Correct me if I'm wrong but surely the first "month" you got the benefit of the missing month.

Say you started in June 12, so you did not use your standard rate cut off or credits for June 12 then in July 12 you get the benefit of 2 months standard rate cut off and tax credits so you benefitted at the start and lose out at the end that the way tax works.