Paye tax question

Jojoface

Hi just wondering if someone can give me some advice. I was off sick for a while and being paid income protection. My employer was receiving the payments from the insurance company and then paying onto me. In August last year they received payment but did not pass it onto me. They kept insisting nothing was owed to me, but finally admitted they were wrong, and I was informed I would receive it at the end of January. By the way I had returned to work by now, so I got my normal salary plus the owed income protection payment together, and as a result was taxed about 500 euro more than usual. This means I have lost out due to my employers mistake/incompetence. Is there anything I can do? Waiting all these months for the payment, then when I get it most of it is gone in taxes really is very frustrating. Any advice appreciated, and sorry if this is in wrong place please move. Thanks.

Just Retired

Hi There
Have you got the payslips from your employer, showing the deductions of Tax PRSI,USC ?. Income from these policies are taxable as income in the usual manner. In order to have the correct deductions made your employer has to include this income and process it through their payroll system. Are you claiming Dept of Social Protection Illness Benefit?

CramCycle

Unless you can convince them to redo your December payslip and your P60. Then deduct the amount paid this month from next months salary (balancing out this year). Then get them to pay you the extra you should have gotten last year. The tax man would then balance the rest out.

It's a stretch but that's the morally correct way to do things. It has happened to me with overtime though and it would seem there is very little to be done if they are not keeping the money from you. If it is a huge sum you could ask them for a letter and apply to revenue to correct your pay from last year and this year, not sure if they would or could.

I just let it slide in the past but I have wondered.

Just Retired

I should also state that all of your Tax Credits and S.R.C.O.P. is applied to all of your Income for the Tax Year in question.You should also check out what terms your employer adjusts your salary when an insurance payout, such as yours, pays out on application. I will give an example Employer Salary,No Illness, €3,000.00c. Insurance Payout €1,800.00c Subsequent Payout as follows,Employer€1,200.00c; Insurance Payout €1,800.00c. Total €3,000.00c which amounts to Normal Salary. The length of these payouts will depend on your employers' contractual arrangement with yourself, and the Insurance Companys' Terms and conditions. It should be noted that, these policies may form part of your Occupational pension plan, always good to look these up,and clarify with them. The Above figures are Monthly Based.

Jojoface

Just Retired wrote: »

Hi There
Have you got the payslips from your employer, showing the deductions of Tax PRSI,USC ?. Income from these policies are taxable as income in the usual manner. In order to have the correct deductions made your employer has to include this income and process it through their payroll system. Are you claiming Dept of Social Protection Illness Benefit?

Hi Just Retired, yes I have payslips from my employer and was taxed etc in the usual manner until August when my usual contact in HR left and nothing was done correctly after that. I am now back at work so not claiming illness benefit. Although the income protection I was receiving was to bring the social welfare payments up to 2/3 of my salary so I was receiving it at the time I was off.

Jojoface

CramCycle wrote: »

Unless you can convince them to redo your December payslip and your P60. Then deduct the amount paid this month from next months salary (balancing out this year). Then get them to pay you the extra you should have gotten last year. The tax man would then balance the rest out.

It's a stretch but that's the morally correct way to do things. It has happened to me with overtime though and it would seem there is very little to be done if they are not keeping the money from you. If it is a huge sum you could ask them for a letter and apply to revenue to correct your pay from last year and this year, not sure if they would or could.

I just let it slide in the past but I have wondered.

Thanks but I am struggling to even get an answer/explanation off them at the minute so I am pretty sure re-doing December's will be out of the question. I'll probably let it slide too because it's all too much stress, I just really wanted to know if I had any comeback / legal standing if I did decide to pursue it further.

Just Retired

Hi-There
Just to outline what can be involved when Illness Benefit (D.S.P.) is claimed, if you are an employee. Employers in some but not all of them pay you,full salary,when you are out sick. This depends on your terms and condition of employment.The period can be 6 Mths or less.Part of these conditions is that you "surrender" the illness benefit to your employer. This means that your employer retains the benefit, but it has to be run through the payroll system. This way you get your "full" salary, let me outline is as Follows:
Assume your salary is €2,815.00c per month. You then claim Illness Benefit and give it to your employer,this amounts to say €815.00c per month.When your payroll Dept. see this they Subtract the Illness benefit from your Salary i.e. €2,815.00c - €815.00c giving a Balance of €2k per month. Illness Benefit is taxable so in order to do this the Illness benefit is added back in, thus arriving at your monthly salary prior to you going sick. The most important part is that if this procedure was not adhered to AND Payroll dept. (H.R. person who left) did not adjust the benefit accordingly as per above then you are liable for tax on your normal monthly salary plus the Illness benefit sic; €3,630.00c. However this will not come out until the end of the tax year when you request a balancing statement.,, the reason for this is that illness benefit does not have tax deducted when paid over. The D.S.P.forward the amounts to revenue at the end of each year. If the payroll was not adjusted to take account of Illness benefit then extra tax over and above what you normally will show up on the P21 statement.It is most likely that this what occured to you.
It should also be noted that the Illness portion is NOT liable to U.S.C. or P.R.S.I. This also gives rise to your Employer's portion of the P.R.S.I. deduction.They only have to deduct P.R.S.I. on your Salary Less Illness benefit i.e.€2,000.00c, so they lose out as well.
As regards the Insurance Policy attached to your pension scheme, your employer most likely claims off this and uses it as your Salary. Most likely to be a time gap between claim and payment though. In order to rectify the problem of overtaxation, is to get your H.R. dept. to declare your salary less total benefits for the particular year, and an oversight on their part led to this.You get an adjusted P21, With the correct Tax deducted. you also get a USC refund as well.You should get a PRSI refund but you have to claim it from the Dept.of Social Protection. I was in such a situation myself and carried out an anylasis of what happened and all was corrected.

Jojoface

Just Retired wrote: »

Hi-There
Just to outline what can be involved when Illness Benefit (D.S.P.) is claimed, if you are an employee. Employers in some but not all of them pay you,full salary,when you are out sick. This depends on your terms and condition of employment.The period can be 6 Mths or less.Part of these conditions is that you "surrender" the illness benefit to your employer. This means that your employer retains the benefit, but it has to be run through the payroll system. This way you get your "full" salary, let me outline is as Follows:
Assume your salary is €2,815.00c per month. You then claim Illness Benefit and give it to your employer,this amounts to say €815.00c per month.When your payroll Dept. see this they Subtract the Illness benefit from your Salary i.e. €2,815.00c - €815.00c giving a Balance of €2k per month. Illness Benefit is taxable so in order to do this the Illness benefit is added back in, thus arriving at your monthly salary prior to you going sick. The most important part is that if this procedure was not adhered to AND Payroll dept. (H.R. person who left) did not adjust the benefit accordingly as per above then you are liable for tax on your normal monthly salary plus the Illness benefit sic; €3,630.00c. However this will not come out until the end of the tax year when you request a balancing statement.,, the reason for this is that illness benefit does not have tax deducted when paid over. The D.S.P.forward the amounts to revenue at the end of each year. If the payroll was not adjusted to take account of Illness benefit then extra tax over and above what you normally will show up on the P21 statement.It is most likely that this what occured to you.
It should also be noted that the Illness portion is NOT liable to U.S.C. or P.R.S.I. This also gives rise to your Employer's portion of the P.R.S.I. deduction.They only have to deduct P.R.S.I. on your Salary Less Illness benefit i.e.€2,000.00c, so they lose out as well.
As regards the Insurance Policy attached to your pension scheme, your employer most likely claims off this and uses it as your Salary. Most likely to be a time gap between claim and payment though. In order to rectify the problem of overtaxation, is to get your H.R. dept. to declare your salary less total benefits for the particular year, and an oversight on their part led to this.You get an adjusted P21, With the correct Tax deducted. you also get a USC refund as well.You should get a PRSI refund but you have to claim it from the Dept.of Social Protection. I was in such a situation myself and carried out an anylasis of what happened and all was corrected.

Thanks for the detailed explanation, that could possibly explain what has happened. I will look into it