PAYE Advice required.

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jasonr

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Both my wife and i work and are jointly assessed for tax. However in 2007 my wife was on parental leave (which is statutory leave) for the full year. She did not receive any payment from her employer during the 2007 tax year. However she did accrue Bank holdiay leave and her annual leave entitlment for which she got payment in respect of when she went back on payroll in 2008.

My Question - For 2007 I earned 49,000 and ended up paying tax at 41% on everything over 43,000 which was the Cut of point for that year. However the cut-off point for a married couple in 2007 was about 70k. Obviously I did not receive her cut off point and revenue informed me at the time that because her employer was not paying her during 2007 I could not have both Cut off points. Is this correct? if so is it a breach of statutory leave guidelines?
 
You are not entitled to any cut-off over the €43,000 for the 2007 year anyway, regardless. The maximum that any spouse can have in cut-off in 2007 is the €43,000.
 
Cheers for that Graham. I take it that the whole tax system changed in 2008 so!
 
jasonr said:
Cheers for that Graham. I take it that the whole tax system changed in 2008 so!
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? No. Individualisation and the maximum transferable standard rate cut-off point has been with us since 2000/01 and the rules have remained the same since. There is a maximum amount ( currently €45,400 ) which any spouse in a two income house can avail of. The potential to earn up to €72,800 at 20% is only available where there is at least that amount of income between the spouses.

If you have a married one income household then €45,400 is currently the threshold for the higher rate.
 
Sorry Graham but I'm still not clear on this.

My wife is in full-time employment with the same employer for 20 years. We are a double income family so my point is that should I not have got a chance to use the 70K cut off point in 2007. The one year she had no payment was 2007 when she availed of Parental leave.

My income is €49k and hers is €28k. Can we use the 72k cut off point now to avoid me paying the higher rate on anything over 45.400. thanks
 
jasonr said:
My income is €49k and hers is €28k. Can we use the 72k cut off point now to avoid me paying the higher rate on anything over 45.400. thanks
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No. You cannot use the increased standard rate cut-off point where there is only one income. Neither can you use any surplus she might have on her cut-off point over her earnings. In a year when she has earnings then yes, she can avail of the increased cut-off point so she pays 20% on earnings up to that limit. No earnings, no increased standard rate cut-off point. She might have been still on the employer's payroll but was not actually paid.

Look at it this way. If you earned €45,400 now and she earned €27,400 then the total of €72,800 would be taxed at 20%. If you earned €49,000 and she earned €15,000 then you would get €45,400 at 20% and the excess to €49,000 at 41%. Your wife would get her €15,000 at 20%. However in that case, even though she could have earned €27,400 at 20% she only earned €15,000 so you lose the rest of her entitlement, it's hers not yours.
 
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