Up to 120,000 Irish employees could end up paying a 51% emergency tax rate following the introduction of a new Pay as You Earn (PAYE) system at the start of this year.
The Association of Chartered Certified Accountants (ACCA) said that some staff who are paid weekly could be adversely affected. If their employer has incorrect employment details for them, the emergency tax rate of 51% will be applied.
ACCA has said the situation can only be rectified by employees updating their details on their PAYE online account directly, but warns it may take some weeks for employers to refund the full amount of overpaid tax.
Stephen O’Flaherty, chairman of ACCA Ireland, told Accountancy Daily: "Under the old system, accountants were able to manage the PAYE system to ensure that all employees got paid. Under the new online system they simply cannot do this."
As a result, he advised those affected to register under ‘myaccount’ on the Revenue’s website and update their records as soon as possible as it is incumbent on them rather than their employer to do so.
“Those people that are paid monthly still have time to make sure their salary is correct by updating myaccount before the end of January," O’Flaherty added.
He also cautioned against employers making additional payments to help out employees who may end up in difficulties because of a lower than expected pay packet.
"Revenue has budgeted a collection of an additional €50 million (US$57.7 million) from PAYE modernisation, so our advice to employers is to ensure they keep their employees up to date but also to implement the system correctly to ensure they are not a contributor to that considerable tax figure," O’Flaherty said.
Revenue spokesperson Rob O’Brien told Extra.ie that under the PAYE modernisation scheme, employers had already successfully submitted the pay and statutory deductions details of more than 820,000 employees. Of those, approximately 1.3% were estimated to be on emergency tax, he added.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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Up to 120,000 Irish employees could end up paying a 51% emergency tax rate following the introduction of a new Pay as You Earn (PAYE) system at the start of this year.
The Association of Chartered Certified Accountants (ACCA) said that some staff who are paid weekly could be adversely affected. If their employer has incorrect employment details for them, the emergency tax rate of 51% will be applied.
ACCA has said the situation can only be rectified by employees updating their details on their PAYE online account directly, but warns it may take some weeks for employers to refund the full amount of overpaid tax.
Stephen O’Flaherty, chairman of ACCA Ireland, told Accountancy Daily: "Under the old system, accountants were able to manage the PAYE system to ensure that all employees got paid. Under the new online system they simply cannot do this."
As a result, he advised those affected to register under ‘myaccount’ on the Revenue’s website and update their records as soon as possible as it is incumbent on them rather than their employer to do so.
“Those people that are paid monthly still have time to make sure their salary is correct by updating myaccount before the end of January," O’Flaherty added.
He also cautioned against employers making additional payments to help out employees who may end up in difficulties because of a lower than expected pay packet.
"Revenue has budgeted a collection of an additional €50 million (US$57.7 million) from PAYE modernisation, so our advice to employers is to ensure they keep their employees up to date but also to implement the system correctly to ensure they are not a contributor to that considerable tax figure," O’Flaherty said.
Revenue spokesperson Rob O’Brien told Extra.ie that under the PAYE modernisation scheme, employers had already successfully submitted the pay and statutory deductions details of more than 820,000 employees. Of those, approximately 1.3% were estimated to be on emergency tax, he added.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER STORIES THAT MAY INTEREST YOU
Ireland introduces most significant PAYE reform in 60 years
Irish Taoiseach defends proposed income tax cuts
Irish government still 'some way off' achieving minimum wage commitments
