PAYE or CGT

moleyv

Scenario:

Employee is given a payment which is not from their employer, for staying an employee with the employer for a period of time. It will be self assessed.

1. Is this subject to normal PAYE taxes (PRSI etc.) or is it CGT? The payment could be seen as a bonus however it is explicit in terms that the company making the payment is not an employer. Does this make a difference?
2. When is the tax liability due? As in, would it be possible to stick the amount that will be due into a savings account until the end of the tax year, rather than pay immediately as it is self assessed.

Thanks

Lenar3556

https://www.boards.ie/discussion/2058396735/paye-or-cgt

It’s taxable income, individual receiving it should make a tax return the following year. Form 11 or Form 12 depending on the value.

Xander10

https://www.boards.ie/discussion/2058396735/paye-or-cgt

I think Revenue would look for more info.

Why is someone who is not the employer making such a payment?

Is the person related to either the employer or employee?

Red Silurian

It's income so PAYE, PRSI and USC due

CGT is only from the proceeds of capital

Lenar3556

https://www.boards.ie/discussion/comment/123176735#Comment_123176735

It’s a self assessed system, so revenue won’t typically ask unless they are specifically approached or there is a compliance intervention.

It’s clear from the scenario that the employer and source of the funds are connected. But the funds are seemingly coming from a separate entity, where an employment/PAYE relationship doesn’t exist. So therefore the appropriate course form the employees perspective is to declare the additional income and pay the tax due. Form 12 if it’s less than €5,000 and this can be done easily on MyAccount. If it’s more than that, they will need to file a Form 11.

It would of course be easier for the receiver if the employer paid it via payroll in the normal way, but one shouldn't look a gift horse in the mouth.