Should I switch to 1 week/ 1 month basis?

Mona G

Registered User
Messages
35
I am a permanent, full time employee and receive a monthly salary. I have been in my current employment for almost a year, and have been working from home since mid March last. We have been assured by our employers that we are still quite busy and should remain working full time for the time being.

Recently our accountant has sent an email to several of the employees that we should request Revenue to switch us over to a monthly basis of assessment – 1 week/ 1 month basis.

I am aware that since our salaries are supplemented by Covid 19 payment, the tax situation is a bit mixed up, and I have received a higher salary last month with the overpayment now due to be deducted from this month’s salary. The accountant explained that this switching would mean that the salary overpayment/ deduction situation will not be happening again, and that it will automatically switch back to the cumulative basis from next January 2021.

I have been searching the askaboutmoney forums on this subject, also looked at the revenue and citizens information websites, but still cannot understand the full consequences of this change.

Would someone be able to please share your knowledge on how this change may affect my employee status (still full time permanent?), my annual leave entitlements, our mortgage application (we have approval in principle)? Anything else I should be aware of?

If it is not good for me to switch to the week 1 basis – do I need to do it?

Your advice and opinions will be greatly appreciated!

Mona
 

RedOnion

Frequent Poster
Messages
4,285
It doesn't change your total tax liability for the year, but would prevent you getting a refund of tax already paid, which you'll ultimately have to repay during the rest of the year.

From KPMG here
"Finally, Revenue have also advised that any employee who wishes to obtain an amended 2020 tax credit certificate on a Week 1/Month 1 basis should contact Revenue via MyEnquiries. This may be of interest to employees who do not wish to avail of refunds of tax paid for the year to date during the subsidy period, allowing them to minimise potential tax liabilities on the subsidy and other income as part of the end of year review."
 

Mrs Vimes

Frequent Poster
Messages
955
Basically the TWSS scheme is not taxed on payment but it is taxable. Employers are instructed to refund tax due to employees in their wages but to warn the employees that tax will be collected at a later date.

Eg if your net pay was €500 per week in January then you are now being taxed on €150 and the other €350 is not being taxed but you will have to pay the tax on it probably by reduction of credits next year. Also, the tax you did pay up to mid-March is now being refunded as though your total pay is €150 per week. If you opt for week one basis it will stop further refunds of tax already paid this year and you will have a smaller underpayment to deal with.

I do wages for a business and when I told the employees that the extra €40 or whatever in their wages would be paid back eventually and not to spend it they all asked to keep an envelope each in the safe so they wouldn't be stuck for it. They are mostly on/near minimum wage.
 

Sunny

Frequent Poster
Messages
3,853
This is really important thread. The lack of awareness out there on this is staggering. My sister in law works in retail for large company and they were all having a laugh loving the lockdown because they were earning more than they thought due to tex refunds. They never considered what will happen after the lockdown.
 

Tintagel

Frequent Poster
Messages
406
Because I was receiving a new social welfare payment plus private pension and because I turned 66 I was put on a 1 week/1 month basis. Then a similar situation happened with my wife. As a result our tax refunds did not adjust themselves each month, rather we have to wait until the end of the year, do our tax return before receiving a refund of tax due. In our case it means we have to wait quite some time before we get our refunds.

I can see how it works the opposite way as well.
 

cremeegg

Frequent Poster
Messages
3,214
Recently our accountant has sent an email to several of the employees that we should request Revenue to switch us over to a monthly basis of assessment – 1 week/ 1 month basis.

Would someone be able to please share your knowledge on how this change may affect my employee status (still full time permanent?),
no effect
my annual leave entitlements,
no effect
our mortgage application (we have approval in principle)?
there is no reason why it should effect your mortgage application, though banks can be unpredictable
Anything else I should be aware of?
This should only effect the timing of your tax payments during the year, nothing else
 

Mona G

Registered User
Messages
35
This is fascinating and most informative - thank you so much for all your help!
 

Sunny

Frequent Poster
Messages
3,853
You might still have approval in principle which is fine but the banks will do full underwriting on your application again if you looked for a letter of offer and will take into account you are receiving a salary top up. They might not be willing to lend while that is the case. The criteria has changed in banks so you need to check. Some banks have also stopped giving exemptions to Central Bank restrictions.
 

twofor1

Frequent Poster
Messages
1,347
Would someone be able to please share your knowledge on how this change may affect my annual leave entitlements,
no effect
Any more information on this ?

I am also a full time employee who has been temporarily laid off, my employer is availing of the Temporary Wage Subsidy Scheme, though not topping it up.

My employer with the union's knowledge wrote to all of us and said we do not accrue annual leave during lay off.

We do remain eligible for public holiday entitlements for the first 13 weeks of lay off, subject to the Organisation of Working Time Act.

I will check with the union, do you have a link or anything I can reference that says holidays still accrue during temporary lay off ?

Tks.
 

lughildanach

Registered User
Messages
23
How did I miss that, tks.
Although circumstances are different, its an important point. Government said that those on TWSS would be considered to be in employment. However, Organisation of Working Time Act may need to be amended to give this intention effect. You should perhaps start new thread.
 
Top