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Tax (USC) on salary arrears

  • 03-01-2023 09:03PM
    #1
    Hippodrome Song Owl
    Registered Users, Registered Users 2 Posts: 1,401 ✭✭✭


    Im fairly sure the answer is no, but is there anything that can be done to reduce the tax owed on salary arrears paid in a lump sum? In particular as regards USC (not concerned about PAYE as 40% would have been due anyway)?

    The arrears payment means having to pay 8% USC on the money received, although had it been paid correctly by the employer at the time (over a 10 year period) then salary would never have exceeded the threshold for the top rate in those years.

    Thank you.



Comments

  • #2
    ari101
    Registered Users, Registered Users 2 Posts: 2,835 ✭✭✭ari101


    Not avoidable unfortunately 😐

    Tax and Duty Manual 42-04-24B... "USC is due on the date of payment ... (including arrears of pay) irrespective of whether ... attributable to an earlier year."



  • #3
    Hippodrome Song Owl
    Registered Users, Registered Users 2 Posts: 1,401 ✭✭✭Hippodrome Song Owl


    Thanks very much for confirming that. That's what I expected.

    It's no wonder the public sector can't recruit and retain staff. Illegally withhold wages for a decade then benefit by collecting extra tax too. Good riddance to them!



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