end of tax year query

thesimpsons

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can someone settle an argument please.

If I am paid for work done in December 2016 on 15th January 2017 - does that payment figure go into the 2016 P60 or should it become part of the 2017 tax returns?

I believe it should be part of the 2017 return and subject to the 2017 taxes due as the payment was made in 2017 no matter what period it relates to.

thanks
 
As a rule the Operation of PAYE is applied to a payment so the salary will form part of the 2017 payroll.

Technically speaking the income should be assessed to tax in 2016 but this never happens to employees.
 
Just another example of woolly tax rules. Along with the form-11/form-12 debate, the question, is interest payable when preliminary tax is late, yes no well it depends, and many others.
 
can someone settle an argument please.

If I am paid for work done in December 2016 on 15th January 2017 - does that payment figure go into the 2016 P60 or should it become part of the 2017 tax returns?

I believe it should be part of the 2017 return and subject to the 2017 taxes due as the payment was made in 2017 no matter what period it relates to.

thanks

As Joe_90 said, the payroll operation will treat the pay and tax as occurring in 2017 and nothing further will happen.

However, strictly, in the circumstances mentioned, the pay relates to 2016 and the tax relates to 2017.

Just another example of woolly tax rules.

This is not something dreamed up by Revenue, rather it is case law -

Income relates to the year it is earned:
McKeown v Roe, Irish case vol 1, p 206,
Dracup v Radcliffe, vol 27, p 188, and
Heasman v Jordan, vol 35, p 518.

Income tax deducted under PAYE relates to the year the income was paid:
Bedford v Hannon, Irish case - Leaflet No. 105.
 
Sophrosyne - strictly speaking so, should the pay figure go in the 2016 P60 and the taxes go into the 2017 P60 ? ( although I don't see how this could work)
 
It would happen rather by request for end-of-year review for both years.

However, one would request this only if there was a tax advantage, for instance, if reverting the pay back to 2016, would result in less tax due on that pay.

Say, the highest rate of tax payable on all income, including the reverted pay, for 2016 was 20% but the highest rate for 2017 was 40%.

The saving would be the pay @ 40%-20%.
 
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