PAYE Backdated Pay.

highwaymaniac

Can anyone help me with this.

Public sector, started in August 2018 having taken a year off work. On €50k per annum, will have earned roughly €21k to year end so therefore I could have earned about another €15k at the standard tax rate.

I am acting up to the next grade since mid September, (maternity cover) so therefore due extra pay of approx. €4k for the 14 weeks to year end 2018.

However I have to be in the acting grade for 6 months before any payment is due and then it will be backdated to Sept 18. So I expect to receive the extra €4k for 2018 in March 2019. Am I entitled to have this declared as 2018 income and thus paying tax at the standard rate or am I stuck paying tax at the higher rate for this in 2019?

wally1990

no you cannot as of 1st of January 2019 PAYE modernisation is being introduced

in the legislation is clearly stipulate that money paid will use your RPN previously known as your tax credits and allowances at the time the payment is made to the person

What you can do is in February 2019 is register an account with the revenue called my account and file a p21 balancing statement

This will. Take into account all money paid in 2018 and offset your allowances and credits and any other payment will be due back to you by way of a refund

normally this is done via your tax credits for 2019

you cannot backdate any payment earned this is not a possible

You and your employer also need to very careful with PAYE mod as there is 4000 euro fines for breaches when not. Following the new payroll rules

highwaymaniac

wally1990 wrote: »

no you cannot as of 1st of January 2019 PAYE modernisation is being introduced

in the legislation is clearly stipulate that money paid will use your RPN previously known as your tax credits and allowances at the time the payment is made to the person

What you can do is in February 2019 is register an account with the revenue called my account and file a p21 balancing statement

This will. Take into account all money paid in 2018 and offset your allowances and credits and any other payment will be due back to you by way of a refund

normally this is done via your tax credits for 2019

you cannot backdate any payment earned this is not a possible

You and your employer also need to very careful with PAYE mod as there is 4000 euro fines for breaches when not. Following the new payroll rules

Thanks for the response, I feared as much, just my luck. €1000 quid extra to the govt in taxfor no good reason 😓

caviardreams

Is there really no way around this? Say even where there was a payroll error, or additional pay due to a union case etc.? Seems very unfair if the pay related to an earlier period.

highwaymaniac

caviardreams wrote: »

Is there really no way around this? Say even where there was a payroll error, or additional pay due to a union case etc.? Seems very unfair if the pay related to an earlier period.

I am certainly going to pursue it, might be the first time I have ever contacted a public representative.

Tow

caviardreams wrote: »

Is there really no way around this? Say even where there was a payroll error, or additional pay due to a union case etc.? Seems very unfair if the pay related to an earlier period.

No. It is not a new rule, the only change is to the PRSI legislation and the fact it is being hard enforced.

Will Yam

highwaymaniac wrote: »

I am certainly going to pursue it, might be the first time I have ever contacted a public representative.

I think you will be wasting your time with revenue on this one. The new legislation for (2019) is very clear - what's paid in 2019 is taxed in 2019, regardless of what year the payment was earned in.

Your only recourse would have been to insist on payment in 2018 for work done in 2018. Bit late for that now though.

GarIT

This is literally just theft and should be challenged in the supreme court.

What about companies that are struggling to pay people and it bleeds over into the next year. If I'm not.paid anything for 3 months in 2018 and paid 15 months wages in 2019 can I sue my employer for paying below minimum wage during 2018 given what they consider 2018 income revenue considers 2019 income?

Will Yam

GarIT wrote: »

This is literally just theft and should be challenged in the supreme court.

What about companies that are struggling to pay people and it bleeds over into the next year. If I'm not.paid anything for 3 months in 2018 and paid 15 months wages in 2019 can I sue my employer for paying below minimum wage during 2018 given what they consider 2018 income revenue considers 2019 income?

Of course you can sue. Best of luck to you.

GarIT

Will Yam wrote: »

Of course you can sue. Best of luck to you.

I know you probably can't but I'm just highlighting that it is unfair that you can end up paying extra tax due to issues completely out of your control

highwaymaniac

Will Yam wrote: »

I think you will be wasting your time with revenue on this one. The new legislation for (2019) is very clear - what's paid in 2019 is taxed in 2019, regardless of what year the payment was earned in.

Your only recourse would have been to insist on payment in 2018 for work done in 2018. Bit late for that now though.

It's sickening really, worked my ass off too, really had to step up,lots of late nights which I don't mind putting in as it is very good experience but I didn't for a second think I would get shafted like this by the revenue.

I'll get onto my TD's for all good it will do, lobby for a change in legislation at next budget time. I'll see if Coveney, McGrath or Martin are remotely interested at least an election is around the corner.

Will Yam

highwaymaniac wrote: »

It's sickening really, worked my ass off too, really had to step up,lots of late nights which I don't mind putting in as it is very good experience but I didn't for a second think I would get shafted like this by the revenue.

I'll get onto my TD's for all good it will do, lobby for a change in legislation at next budget time. I'll see if Coveney, McGrath or Martin are remotely interested at least an election is around the corner.

To be fair it isn't revenue you really have the row with. It's your employer who waited 6 months to pay you.

wally1990

As the above poster mentioned this isn't an issue with the legislation for taxation in Ireland

the problem here is your employer not paying for you and having the policy of not paying for 6 months

highwaymaniac

wally1990 wrote: »

As the above poster mentioned this isn't an issue with the legislation for taxation in Ireland

the problem here is your employer not paying for you and having the policy of not paying for 6 months

Clearly it is an issue with the legislation. The Employer should not be dictated to as to when they have to pay their employees.

It could be exploited the other way, say for example someone is leaving a job in January 2019 to go travelling, and said to their employer don't pay me for the 2nd half of 2018 until January 2019, so that they are in the lower tax band both years. Employer delighted as helps their cash flow. I am sure Revenue would be very quick to strike that down as not being bona fide employment terms.

Will Yam

highwaymaniac wrote: »

Clearly it is an issue with the legislation. The Employer should not be dictated to as to when they have to pay their employees.

It could be exploited the other way, say for example someone is leaving a job in January 2019 to go travelling, and said to their employer don't pay me for the 2nd half of 2018 until January 2019, so that they are in the lower tax band both years. Employer delighted as helps their cash flow. I am sure Revenue would be very quick to strike that down as not being bona fide employment terms.

You are sure? Really?

Will Yam

highwaymaniac wrote: »

Clearly it is an issue with the legislation. The Employer should not be dictated to as to when they have to pay their employees.

It could be exploited the other way, say for example someone is leaving a job in January 2019 to go travelling, and said to their employer don't pay me for the 2nd half of 2018 until January 2019, so that they are in the lower tax band both years. Employer delighted as helps their cash flow. I am sure Revenue would be very quick to strike that down as not being bona fide employment terms.

They could strike it down by using s811 of the taxes consolidation act.

highwaymaniac

Will Yam wrote: »

You are sure? Really?

Why the sarcasm?

wonski

Many people receive their 2018 bonus in 2019.

Is it unfair to be taxed on them in 2019?

It really depends on circumstances (I was away from work for last 3 months so it would suit me to get it added to this year p60, but that's not how it works).

If you are a paye you pay taxes on your income when you receive it, not when that income was generated.

highwaymaniac

wonski wrote: »

Many people receive their 2018 bonus in 2019.

Is it unfair to be taxed on them in 2019?

It really depends on circumstances (I was away from work for last 3 months so it would suit me to get it added to this year p60, but that's not how it works).

If you are a paye you pay taxes on your income when you receive it, not when that income was generated.

I think it is very unfair.

Another example, a paye worker on €34,550 pa in 2018, paid monthly in arrears on 30th of each month, Employer misses December pay day due to cash flow issues, paye worker gets paid 2nd of January 2019. So in this perfectly plausible real world example, this costs them €576 in extra tax, do the tax paying public believe this is fair? (I have assumed that they get a €750 pay rise and get paid their full 2019 salary in 2019)

wonski

If your employer doesn't pay your wages on time, there is more things to worry about than tax credits.

Take it to the court if needed. Revenue has nothing to do with it.

In your example there will be tax due back to the employee for 2018 anyway

Will Yam

highwaymaniac wrote: »

I think it is very unfair.

Another example, a paye worker on €34,550 pa in 2018, paid monthly in arrears on 30th of each month, Employer misses December pay day due to cash flow issues, paye worker gets paid 2nd of January 2019. So in this perfectly plausible real world example, this costs them €576 in extra tax, do the tax paying public believe this is fair? (I have assumed that they get a €750 pay rise and get paid their full 2019 salary in 2019)

In our system some income is taxable when it falls due. For example if you are due rent in 2018 but don't get some of it till January 2019 it falls to be taxed in 2018 regardless.

However if you have shares and a dividend is awarded in 2018 but not actually paid until 2019 you pay income tax on it in 2019.

Paye income used be taxed like rent. If the payment related to 2018 it was included in 2018 income even if it was paid in 2019.

This changed in recent legislation to the dividend model outlined above.

Ironically it will benefit far more people than it will disadvantage. Anyone getting a bonus for 2018 which is paid in 2019 will be taxed at the lower - 2019 - rate. They will be pleased at this.

But like everyone else they can do nothing about it - it's the law and because of paye modernisation revenue can't go back to the old system

Will Yam

highwaymaniac wrote: »

I think it is very unfair.

Another example, a paye worker on €34,550 pa in 2018, paid monthly in arrears on 30th of each month, Employer misses December pay day due to cash flow issues, paye worker gets paid 2nd of January 2019. So in this perfectly plausible real world example, this costs them €576 in extra tax, do the tax paying public believe this is fair? (I have assumed that they get a €750 pay rise and get paid their full 2019 salary in 2019)

The individual in this case will get a rebate for 2018.

highwaymaniac

Will Yam wrote: »

In our system some income is taxable when it falls due. For example if you are due rent in 2018 but don't get some of it till January 2019 it falls to be taxed in 2018 regardless.

However if you have shares and a dividend is awarded in 2018 but not actually paid until 2019 you pay income tax on it in 2019.

Paye income used be taxed like rent. If the payment related to 2018 it was included in 2018 income even if it was paid in 2019.

This changed in recent legislation to the dividend model outlined above.

Ironically it will benefit far more people than it will disadvantage. Anyone getting a bonus for 2018 which is paid in 2019 will be taxed at the lower - 2019 - rate. They will be pleased at this.

But like everyone else they can do nothing about it - it's the law and because of paye modernisation revenue can't go back to the old system

I prefer the old "rent" system obviously! All I can do so is lobby the lawmakers.

Will Yam

highwaymaniac wrote: »

I think it is very unfair.

Another example, a paye worker on €34,550 pa in 2018, paid monthly in arrears on 30th of each month, Employer misses December pay day due to cash flow issues, paye worker gets paid 2nd of January 2019. So in this perfectly plausible real world example, this costs them €576 in extra tax, do the tax paying public believe this is fair? (I have assumed that they get a €750 pay rise and get paid their full 2019 salary in 2019)

You actually might have a case against your employer. If it were the private sector you'd stand a good chance of negotiating a reasonable settlement.

highwaymaniac

Will Yam wrote: »

You actually might have a case against your employer. If it were the private sector you'd stand a good chance of negotiating a reasonable settlement.

Somehow I doubt it, that a employee would take on a struggling private company yet alone stand any chance of negotiating a settlement. Anyways an employer could state in a contract that payday is x date of the month +- 3 working days.

Will Yam

highwaymaniac wrote: »

Somehow I doubt it, that a employee would take on a struggling private company yet alone stand any chance of negotiating a settlement. Anyways an employer could state in a contract that payday is x date of the month +- 3 working days.

Maybe but chanced are that private sector would be aware of implications , and if not struggling might agree to something. But as it's public service they are probably incompetents......