I could feel my payday glow vanishing as I dumbfoundedly stared at my payslip, which was half of what I should have received. I was unknowingly and incorrectly charged the emergency tax, like hundreds of fellow residents. How did I understand the problem and, more importantly, how did I get back my money?
What is Emergency Tax?
Emergency tax is the taxation of all your earnings at a higher rate of tax for a temporary period and results in a lower wage than normal, the cut-off tax rate being 40% from 2015. A temporary tax credit is given for the first month of employment which is based on the Single Person Tax Credit and rate band for the tax year.
However, from the second month on, tax deductions are increased substantially. Therefore, during this emergency tax period, your pay packet may contain a lot less than it should.
When is Emergency tax applied?
Emergency tax is applied when you don’t register a new job with the Tax Revenue Commission. This happens if your employer hasn’t received a:
- You don’t provide your employer with a PPSN
- Your employer hasn’t received a Revenue Payroll Notification (RPN) – this is managed by the Revenue
In each case, you will be given a temporary tax credit for the first month and tax deductions will be increased from the second month onwards.
The effect of emergency basis tax is that, after 4 weeks, no tax credits are given, and tax is paid at a higher rate from week 9, regardless of the level of pay.
The emergency rate of USC (Universal Social Charge) will also be applied to your earnings at a rate of 8%.
Why are workers being taxed incorrectly?
The changes to Revenue’s reporting systems have caused some employers unnecessarily putting staff on an emergency tax regime. The problems could occur where an employee’s PAYE records are not entirely up to date – for example, where they have taken on a second job, but their tax details have not been adjusted to reflect this.
Revenue’s analysis of the figures confirmed that many employers who incorrectly operated emergency tax in their first payroll run of the year have since corrected the error and applied the correct details to their employee’s earnings.
How did I get my money back?
After realising the massive loss of earnings from my paycheck, I promptly called my employer and informed him of the situation. As it turns out, a large majority of my co-workers, including my employer, were also charged emergency tax. As the weeks passed, I can change the emergency tax on three of my payslips, which docked my pay by 51% each week.
Emergency tax is levied by the revenue department rather than by your employer hence the correction process cannot be handled directly or as swiftly as you would wish hence patience would be your biggest asset in this process.
In order to get back, the money taxed any individual who is stuck in a similar situation shall follow these steps:
Updating your Information
- Log into your Revenue account
- Scroll down to the main PAYE Services tab
- Click on “Add job or Pension”
- Select “Update Job” or go to “Pension Details”
- Under “add or cease a job or pension” select start
- Make sure all old jobs have been ceased
- Click on “Cease Job” (for any old job that hasn’t been ceased)
There is no way for the revenue department to rectify the problem automatically; hence, the only way out is to enter an enquiry.
Entering an enquiry
- Log into your Revenue account
- Scroll down to the “Manage My Record” tab
- Click on “My Enquiries”
- In the “My Enquiries” tab, scroll down
- Click on “Add New Enquiry”
- In “Enquiry Relates To” select “PAYE employee – Credits/Reliefs”
- In “More Specifically” select “PAYE Services Query”
- In “Enquiry Details” type the following:
Please can you investigate why credits are not being processed to me in my current employment with “employing company name.”
- Attach a screenshot of your payslip (proof of emergency tax being levied)
- Enter your email
- Click on submit enquiry
Once you complete the above-given steps, it is mostly a waiting game; the revenue office shall get back to you within 1-2 working days. They will cease levying the tax and provide you with further information to gain back your tax.
In my case, my employer had to update my information with the correct RPN information. I forwarded the email to my employer and successfully gained back the tax I had paid with my next payslip.
While the entire process might seem slightly cumbersome and daunting, in reality it is a common problem many workers face when they first start working; however, such kinks can be solved easily if they know the ins and out of the system.