Tax laibility changed by Husbands Employer. Is he allowed to do this.

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Maz2408

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Hi, we have just submitted our 2016 tax return to our Tax accountant. My husband has been in the same employment for 16 years always taxed as a single Man as I was employed for many of those years.

He has always been on a set take home wage agreed from day 1, employer pays tax, prisi, usc etc.

I no longer work outside the home but we have taxable income on 2 buy to lets, for the past few years we have offset the buy to let tax due on the buy to lets through my Husband claiming my tax credits in his yearly claims, normally around €3400 refund due in his personal tax.

Accountant has informed us that my Husbands employer "who knows I can no longer work outside the home and also knows we have other taxable income" has changed my Husbands tax payments for 2016 claiming my tax credits without any consultation with my Husband, this has saved the employer approx €10,000 in taxes but cost us €3400 in tax rebate.

Can my Husbands employer do this when all previous years of employment he was taxed as a single income.
 
Maz2408 said:
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Accountant has informed us that my Husbands employer "who knows I can no longer work outside the home and also knows we have other taxable income" has changed my Husbands tax payments for 2016 claiming my tax credits without any consultation with my Husband, this has saved the employer approx €10,000 in taxes but cost us €3400 in tax rebate.
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Only an individual can order Revenue to change their tax credits. An employer cannot do this and Revenue will not entertain any application from an employer or third party to this effect.
 
I have seen lots of cases that the Revenue will unilaterally amend a cert where one spouse is issued with a P45 and does not take up employment elsewhere.

So the first question to ask is did you receive anything from Revenue saying that your husbands tax credits and standard rate cut off were to be changed. If not then you certainly have a case.

So the reality is that your husbands employers have received the benefit of the increased standard rate band and the your personal tax credit so his tax would have gone down by €3,450 assuming he is a higher rate tax payer, so his employer saved €6,900 plus the Employers PRSI.

Not sure how you covered the income tax liability and had a refund of €3,400.
 
T McGibney said:
Only an individual can order Revenue to change their tax credits. An employer cannot do this and Revenue will not entertain any application from an employer or third party to this effect.
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They (employers) have done it, his 2016 P60 clearly shows he was taxed as a married man, all previous P60,s as a single Man. Does he have any right to demand the tax rebate he would have normally recieved on his end of year taxes from his employer.
 
Do you the cert of tax credits and standard rate cut off for 2016 for him showing his tax credits and standard rate cut off for the year?
 
Joe_90 said:
I have seen lots of cases that the Revenue will unilaterally amend a cert where one spouse is issued with a P45 and does not take up employment elsewhere.
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I've seen it also. My employment was transferred (toupee) between 2 companies a few years ago, but there was some mix up and Revenue had no record of me working. the following year Revenue automatically allocated all our tax credits to my wife.
 
Maz2408 said:
They (employers) have done it, his 2016 P60 clearly shows he was taxed as a married man, all previous P60,s as a single Man.
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The P60 is not evidence that his employers have made any change. It's just evidence that his tax credits & cut off point allocated to his employment have changed between years. The employer is duty bound to implement the tax credits & cut off point as set out on the appropriate Revenue certificate which issues annually in detail to the employee and in summary to the employer.
 
How is the Employer benefitting from this? Surely there is no change on their end?

edit:
What I mean is, if his net pay on his P60 is less than what he received surely he should take this up with the employer? Am I missing something?
 
Maz2408 said:
Accountant has informed us that my Husbands employer "who knows I can no longer work outside the home and also knows we have other taxable income" has changed my Husbands tax payments for 2016 claiming my tax credits without any consultation with my Husband, this has saved the employer approx €10,000 in taxes but cost us €3400 in tax rebate
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Can you provide more clarity on this? Perhaps if you provide some figures from your husbands 2015 and 2016 P60. My understanding was that the max annual benefit for a standard single income family is €3,450 ((€42,800 - €33,800)*20% + €1,650). How is an employer saving €10,000?

Is it that your husband has been in receipt of the same net income for the last number of years? Has the employer not issued payslips?
 
I presume that the only way the employer benefits is if he agrees to pay the employee "€2,000 a month net" and the employer sorts out the taxes himself.
 
My Husband has spoken to his employer, he claims he knew nothing about the change in tax credit allocation, even though it saved him a substantial amount on taxes paid on my Husbands wage for 2016. So it seems revenue have done this on there own accord without informing us. We are obviously going to revert back to single tax credit for 2017.
 
blured said:
How is the Employer benefitting from this? Surely there is no change on their end?

edit:
What I mean is, if his net pay on his P60 is less than what he received surely he should take this up with the employer? Am I missing something?
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The reality is that the net pay is the same its the gross pay that is different.

So in this case the OP husbands Gross pay is lower by approx €7,000 with no refund where as they would at the end of the year they submit a tax return and claim back approx €3,400 in tax overpaid being the benefit of her not working.
 
Joe_90 said:
The reality is that the net pay is the same its the gross pay that is different.

So in this case the OP husbands Gross pay is lower by approx €7,000 with no refund where as they would at the end of the year they submit a tax return and claim back approx €3,400 in tax overpaid being the benefit of her not working.
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Very strange though, were payslips not issued? Would they not have a contract stating how much they were being paid gross? I didn't think someone could be paid/contracted to a Net of taxes wage
 
Joe_90 said:
The reality is that the net pay is the same its the gross pay that is different.

So in this case the OP husbands Gross pay is lower by approx €7,000 with no refund where as they would at the end of the year they submit a tax return and claim back approx €3,400 in tax overpaid being the benefit of her not working.
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Sounds like an abuse of the PAYE system. Or am I too cynical? :(
 
blured said:
Very strange though, were payslips not issued? Would they not have a contract stating how much they were being paid gross? I didn't think someone could be paid/contracted to a Net of taxes wage
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This goes on a bit in the real world. Any employer who facilitates it is stupid as sooner or later they will be taken to the cleaners if the employee has sufficient cop-on to game the arrangement.
 
I think any employer who agrees a net wage with employees is nuts.

Ive seen cases where they agree say €600 per week into your hand.

So for a single lad this is a gross salary of €40,000.

For a married man with one income its €36,000.

For a married man whose wife has his tax credit and standard rate cut off its a stupid number around €47,000.

Or the employer could say I'm paying €36,000 for the job take it or leave it.
 
Husband does get payslips, everything above board. But we don't check payslips or P60s because his net amount has been the same for 16 years, so no reason up until now to check them. My Husband has been with employer since the business was openend he has (had) a very good working relationship with his employer, employer knows we as a couple have other taxable income and use tax rebate to offset other income in our yearly accounts.

My Husband hasn't had had a pay rise in 15 years athough it has been discussed many times he has agreed not to pursue because of extra tax liability on his employer and tax refund recieved from revenue in previous years, (good relationship). We were totally unaware tax credits were changed but Employer was clearly aware as it saved him a substantial amount in gross wage. Accountant has informed me that he can inform revenue to revert back to single tax credit for 2017, I just feel the good employer/employee relationship has been soured if we go this route as Employer will have a tax lump sum to pay year to date.

On the other hand we feel we have lost €3400 of yearly income that we rely on.
 
Can I also add the net pay situation arose because my Husband was head hunted, his employer had asked him several times to join his team for his new venture which by the way has been a huge success. Husband was asked what his take home pay was, employer offered him €80 more per week. Employer would cover all tax etc. Gross pay was never discussed but has always been used as a barrier to pay rise discussions.

The pay structure has always benefited employer more than employee, my Husband started work at 8.30 this morning and won't finish until at least 10pm tonight on average he works 58 hours per week, he's contracted for 42 hours per week including breaks, he doesn't recieve overtime, but is suppossed to recieve time in lew which is never taken as he's barely able to find time to take his annual leave. Time in lew not taken is scrapped without pay at the end of every financial year.
 
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Maz2408 said:
Can I also add the net pay situation arose because my Husband was head hunted, his employer had asked him several times to join his team for his new venture which by the way has been a huge success. Husband was asked what his take home pay was, employer offered him €80 more per week. Employer would cover all tax etc. Gross pay was never discussed but has always been used as a barrier to pay rise discussions.
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Your husband really needs to negotiate a gross salary like everyone else. The smoke and mirrors deal he has now is bad news all around and may give rise to Revenue problems if gross pay is being suppressed as was suggested by another poster above.
 
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