Salary increase with new employer but lower net income!

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LostinPhilly

Registered User
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6
Hi all,

I am requesting your kind help as I believe something isn't right with the taxes applied to my new job.

To give you a bit of background:

I recently changed jobs. My previous job paid €40K (yearly) whereas my current job is at €48K (yearly). I therefore would expect a slight increase on my monthly income. Prior to accepting the role, I had used a few simulators to assess the tax & net income (forecast at circa. €35.5K or €2.9K monthly).

Today, I had the great displeasure of looking at my reported payment for September and something isn't sitting right. I'm actually earning less than I did in my previous job when the tax basis is Cumulative for both. As a matter of fact, my income tax doubled when I made the switch from Week 1 in August to Cumulative in September (from €729 to €1,347).

In any case, it doesn't make sense that I am earning less from a net income perspective when I'm making more gross-wise. Sure, income taxes are higher, but not to this extent.

To give you some numerical facts:
Previous job at €40K (cumulative tax basis) - Generic salary with no overtime or bonus
Gross Pay: €3,333
Pay for for income tax: €3,300
Income tax: €439
USC: €92.31
PSRI: €133.3
Net monthly income: €2,636 - Result of the above (& matches my monthly income)

Current job at €48K (cumulative tax basis) - Generic salary with no overtime or bonus
Gross Pay: €4,136
Pay for income tax: €4,096
Income tax: €1,347
USC: €6.73
PSRI: €165.46
Net monthly income: €2,576 - Result of the above

Sure enough, an €8K salary increase does not trigger a €1K monthly income tax increase.

I don't owe anything to the revenue either as income tax is obviously paid through PAYE. I really do think something isn't right with this. I've changed jobs before and had a €12K increase last year when I moved to the €40K job and it didn't negatively impact my income.

This and supposedly, I'm not even entitled to a PSRI sight check when I haven't had one in two years. I wonder where all these taxes are going.

Can anyone advise?

Thank you.
 
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1. You are not in an unusual situation. It's Revenue that decides what tax you pay through PAYE in your new job. It looks like they either made a mistake or for some reason believe you should have paid more income tax in the past.
2. If you filled out a claim form over the past few years it is only a matter of contacting Revenue who will rectify the matter. If you have not filled in a claim in each of the past years, you should do so now.
3. Whether or which, if I were you, I'd contact Revenue immediately and take written note of with whom and what was said.
 
Leper said:
1. You are not in an unusual situation. It's Revenue that decides what tax you pay through PAYE in your new job. It looks like they either made a mistake or for some reason believe you should have paid more income tax in the past.
2. If you filled out a claim form over the past few years it is only a matter of contacting Revenue who will rectify the matter. If you have not filled in a claim in each of the past years, you should do so now.
3. Whether or which, if I were you, I'd contact Revenue immediately and take written note of with whom and what was said.
Click to expand...

Thank you, Leper - much appreciated.

No, I have not filled a claim for any of the past few years. However, I will do so now.

I was going to contact the Revenue, indeed.
 
I had (wrongfully) thought that you were going to reply something like "Leper, you pompous Cork creep, I always fill in a tax claim every year, so what are you talkin' about?"

I would second your completing the forms now. If you don't, Revenue will put you on "Emergency" tax (you're probably on this already) and eventually they'll take more tax per month progressively. I don't know how many years it is since you filled in a claim. If it's more than five years or if there are some issues (e.g. wife/partner earnings or facing retirement), I'd recommend you employ a tax advisor.
 
Leper said:
I had (wrongfully) thought that you were going to reply something like "Leper, you pompous Cork creep, I always fill in a tax claim every year, so what are you talkin' about?"

I would second your completing the forms now. If you don't, Revenue will put you on "Emergency" tax (you're probably on this already) and eventually they'll take more tax per month progressively. I don't know how many years it is since you filled in a claim. If it's more than five years or if there are some issues (e.g. wife/partner earnings or facing retirement), I'd recommend you employ a tax advisor.
Click to expand...

Haha - I always appreciate sound advice! No creepiness here!

I'm not on Emergency tax as I had called the revenue to have it sorted and transitioned to Cumulative. Hence, the fact I was quite surprised when I saw the amount of income tax deducted from my salary this month. I would have understood if Emergency tax was still being applied, but it's not the case. They were supposed to refund the amount deducted on the basis of Emergency tax (July amount) through my September salary and instead of doing so, they deducted even more.

I started working after college (2016) and have not filed a single claim (down to pure laziness). So yes, it has been years at this point. When I started my first job, I was put on Emergency tax then Week 1 then Cumulative (same as this scenario), but I got my refund through payroll once I was under Cumulative and my income tax certainly didn't triple!

Hopefully, it will get sorted once I speak to them. Whoever I spoke to in July to have the tax basis moved to Cumulative clearly overlooked this.
 
Protocol said:
Did you check your SRCOP and tax credits?
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That's what I'm thinking. Have you moved your tax credits to your new employer and are on a cumulative basis? It can all be done online these days and emergency tax is supposed to be a thing of the past.
 
SBarrett said:
That's what I'm thinking. Have you moved your tax credits to your new employer and are on a cumulative basis? It can all be done online these days and emergency tax is supposed to be a thing of the past.
Click to expand...

I am indeed on cumulative basis - I requested for this to be changed back in July when I got my first payment through the new job. I was on Emergency Tax in July, then Week 1 in August and Cumulative in September - hence my shock when I saw the amount of income tax deducted on the basis of Cumulative. It was higher than what was deducted on Emergency with no sight of the Emergency tax refund.

As far as Tax Credits go, I believe they also were transferred to the new employer.
 
Leper said:
1. You are not in an unusual situation. It's Revenue that decides what tax you pay through PAYE in your new job. It looks like they either made a mistake or for some reason believe you should have paid more income tax in the past.
2. If you filled out a claim form over the past few years it is only a matter of contacting Revenue who will rectify the matter. If you have not filled in a claim in each of the past years, you should do so now.
3. Whether or which, if I were you, I'd contact Revenue immediately and take written note of with whom and what was said.
Click to expand...

Hi I am a bit new to this and slightly confused as to my own tax situation. I have not filled out a claim in many years is this something that everyone should be doing? I am not even sure what filing a claim refers to?

Apologies for going off topic a bit!
 
Have you tried logging into your "My Account" on revenue? It will confirm if your tax credits, bands etc have been allocated correctly.

You don't say if you are single or married but that can have impact. If you are married and jointly assessed this could be the issue.

Also on the revenue website they show you how to calculate your income tax (or you can use any of the many income tax calculators online), it should be around €736, having said that your USC seems crazy low at only €6, I would have expected that to be over €100.

Have you changed anything else that may be causing this, i.e. are have you started making a pension contribution, that you didn't before as that would reduce your net pay.
 
You need to get the Employer’s registration number, log into my account, and add the new employment.
otherwise your tax credits will not be transferred correctly, and Your new employer’s payroll system will not receive the correct tax credits.
This cannot be done your employer.
 
newirishman said:
You need to get the Employer’s registration number, log into my account, and add the new employment.
otherwise your tax credits will not be transferred correctly, and Your new employer’s payroll system will not receive the correct tax credits.
This cannot be done your employer.
Click to expand...

That's not true your employers are supposed to do this, however with the new system you can do this yourself if they fail to.

When you start a new job

This page explains what you should do when you start a new job
www.revenue.ie www.revenue.ie
 
To the OP - congrats on your new job.

The September payslip is not your normal one as you went from Emergency tax in July, to week1 in August to some kind of catchup in September. Under emergency tax, typically you overpay income tax AND usc - so the low USC in September makes some sense, but the higher income tax does not.
Your August payslip should be closer to a normal take home for the new job (I would expect around 3k?).

Did you take a break between leaving one job and starting the other? or did your new start date overlap with paid holidays from the previous one?
 
New2This said:
Have you tried logging into your "My Account" on revenue? It will confirm if your tax credits, bands etc have been allocated correctly.
Click to expand...

This is the only really relevant advice. With apologies to the other posters.
 
Hi all,

Thank you for the advice.

Yes, I did log into my Revenue account and the tax credits have been allocated property.

I rang the Revenue this morning and they advised me that the issue comes from the fact that I had underpaid income tax in my last payroll with my previous employer. I finished my previous job on July 3rd and was due to be paid outstanding annual leave at the end of July. I started my current job on July 6th. I received both my last salary with my former employer and my first salary with my current employer at the end of July.

The issue is that I was on Emergency Tax when I received my first salary with the current employer and was on cumulative when I received my last salary with the previous employer. I therefore don't see how I underpaid when I was on Emergency Tax thus a higher tax rate on one of them. The Revenue argued that both companies had applied tax credits when I was paid in July, hence the fact it's catching up with me now.

I didn't take a break between the two. I therefore assume both payrolls being active at the same time created the issue.

Appreciate it catching up with me, but if I was on Emergency Tax in July (which would normally lead to a refund) in addition to the increased income tax this month, I somehow feel as though I overpaid. I've paid €3K in Income Tax through my current job since starting in July when the overall Income Tax should be around €8.8K (taking into consideration tax credits). Something isn't right.
 
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In January of next year you should request a P21 from revenue for 2020. This will give you totals for the year and any money owed to you or vice-versa will be paid accordingly.
 
New2This said:
That's not true your employers are supposed to do this, however with the new system you can do this yourself if they fail to.

When you start a new job

This page explains what you should do when you start a new job
www.revenue.ie www.revenue.ie
Click to expand...
ginslia said:
I changed jobs last year and my employer registered all information prior to my start. Same for this new job as well.

I didn't have to do anything.
Click to expand...
 
elcato said:
In January of next year you should request a P21 from revenue for 2020. This will give you totals for the year and any money owed to you or vice-versa will be paid accordingly.
Click to expand...
There's no P21 anymore. It has been replaced by the statement of liability.
 
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