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PAYE or CGT

  • 16-02-2025 10:51AM
    #1
    Registered Users, Registered Users 2 Posts: 1,583 ✭✭✭


    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



Comments

  • Registered Users, Registered Users 2 Posts: 2,065 ✭✭✭Lenar3556


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



  • Registered Users, Registered Users 2 Posts: 5,768 ✭✭✭Xander10


    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?



  • Registered Users, Registered Users 2 Posts: 12,568 ✭✭✭✭Red Silurian


    It's income so PAYE, PRSI and USC due

    CGT is only from the proceeds of capital



  • Registered Users, Registered Users 2 Posts: 2,065 ✭✭✭Lenar3556


    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.



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