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Taxed extra due to Illness benefit payment

  • 06-08-2020 10:29pm
    #1
    Donal27
    Registered Users Posts: 17 ✭


    Hi

    I was out sick for just under 4 weeks in may. As my employer provides sick pay, I indicated on the form that the illness payment should go directly to them. I got paid as normal during this time. However my pay is down today. I paid more paye contribution than normal. I also got a notification from revenue through Ros that my tax band rate had decreased due to DESP illness benefit. Is this normal, I don't remember paying extra tax any other time I was sick, although it was probably never for as long as 4 weeks before. If it is right is it like to effect my next payslip or is it a one off tax increase?

    Any advise appreciated!


Comments

  • #2
    SouthWesterly
    Registered Users, Registered Users 2 Posts: 6,939 ✭✭✭SouthWesterly


    Ib is taxable.
    Revenue lower your credits to account for that.
    It should be processed through your pay to reduce your taxable earnings. This prevents you being taxed twice.


  • #3
    wally1990
    Registered Users, Registered Users 2 Posts: 1,226 ✭✭✭wally1990


    As above mentioned and is correct illness benefit is a taxable payment

    It's paid without the deduction of tax by the welfare so you get the full amount whilst out sick

    Then when you return to work the Revenue will place you on a week1/month1 basis

    And reduce you rate band by the total amount received and reduce your tax credits by 20% percent of the amount received

    In essence if you are on the higher rate of tax anyway you will pay 40% tax (income tax rate) on the illness benefit

    You do not pay Prsi nor USC taxes on illness benefit


  • #4
    splinter65
    Registered Users, Registered Users 2 Posts: 9,420 ✭✭✭splinter65


    Donal27 wrote: »
    Hi

    I was out sick for just under 4 weeks in may. As my employer provides sick pay, I indicated on the form that the illness payment should go directly to them. I got paid as normal during this time. However my pay is down today. I paid more paye contribution than normal. I also got a notification from revenue through Ros that my tax band rate had decreased due to DESP illness benefit. Is this normal, I don't remember paying extra tax any other time I was sick, although it was probably never for as long as 4 weeks before. If it is right is it like to effect my next payslip or is it a one off tax increase?

    Any advise appreciated!

    Go into MyAccount and go to MyEnquiries and send them a message asking them to take you off the Week 1 basis. Itll be sorted out in a few weeks and you’ll be reimbursed by your employer any tax you’ve overpaid.
    In future make any enquiries about PAYE or USC etc in this way. They are responding very promptly at the moment .


  • #5
    wally1990
    Registered Users, Registered Users 2 Posts: 1,226 ✭✭✭wally1990


    splinter65 wrote: »
    Go into MyAccount and go to MyEnquiries and send them a message asking them to take you off the Week 1 basis. Itll be sorted out in a few weeks and you’ll be reimbursed by your employer any tax you’ve overpaid.
    In future make any enquiries about PAYE or USC etc in this way. They are responding very promptly at the moment .

    Woah, do not do that!!

    If you do that then it will retrospectively apply the current reduction in your srcop and tax credits to earnings from Jan until the person went out on sick leave and mess up the future payments , that is why it is issued on a week 1 basis to prevent such a situation.

    What the person should do is file a statement of liability in Jan 2021 which will reflect and bring in the unused credits and srcop for the time out whilst ensuring the tax paid on the IB is for the time when they returned to work


  • #6
    splinter65
    Registered Users, Registered Users 2 Posts: 9,420 ✭✭✭splinter65


    wally1990 wrote: »
    Woah, do not do that!!

    If you do that then it will retrospectively apply the current reduction in your srcop and tax credits to earnings from Jan until the person went out on sick leave and mess up the future payments , that is why it is issued on a week 1 basis to prevent such a situation.

    What the person should do is file a statement of liability in Jan 2021 which will reflect and bring in the unused credits and srcop for the time out whilst ensuring the tax paid on the IB is for the time when they returned to work

    But the person will remain on week 1 basis indefinitely then and not a lot of people can afford that.


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  • #7
    wally1990
    Registered Users, Registered Users 2 Posts: 1,226 ✭✭✭wally1990


    splinter65 wrote: »
    But the person will remain on week 1 basis indefinitely then and not a lot of people can afford that.

    It won't, the new certs for 2020 issue around the 5th of December every year and we will revert to cumulative for next year by default.

    They'll be fine on that front


  • #8
    splinter65
    Registered Users, Registered Users 2 Posts: 9,420 ✭✭✭splinter65


    wally1990 wrote: »
    It won't, the new certs for 2020 issue around the 5th of December every year and we will revert to cumulative for next year by default.

    They'll be fine on that front

    Are you serious? People can’t afford to be on week 1 until December! Unless your on a massive salary just ask to be put back on cumulative. 4 months is too long. I would agree if it was November already.


  • #9
    wally1990
    Registered Users, Registered Users 2 Posts: 1,226 ✭✭✭wally1990


    I am serious, I work in payroll (not being smart)

    I know the Revenue and by god you be hard pressed to get them to switch to cumulative to kick in the unused credits and srcop because they ways switch to a week1/month1 after being on welfare and will not revert you back.

    We have hundreds!! Of clients who were on covid for anywhere between 4 weeks to 12 and now returning to work and all those unused weeks the Revenue are refusing to switch to a cumulative and keeping them on week1


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