# Switching from Self Employed to PAYE mid year



## goosebump (29 Aug 2014)

My wife and I have unusual circumstances.

Previously, I had my own limited company, through which I paid myself under PAYE.

My wife worked for the local VEC as a standard PAYE employee.

Early this year, I stopped working for my own company, and started working for another company as a PAYE employee.

My wife left her job and is now paid by my old company. We effectively switched roles.

My wife's income from my old company will be minimal (€10k). She would have earned YTD approx. €20 from the VEC.

I am trying to determine what my standard cut off rate should be in my new employment.

Should it be €32,800? €41,800? €65,600 (€41,800 + €23,800)

I know that at the end of the year I can do a return and that between us we will be entitled to a standard rate band of €65,600, but if I wanted to receive the extra benefit month on month, how would that be allocated?

Do I have to wait until year end and submit a joint assessment in order to benefit from the €23,800 extension in the band?


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## Joe_90 (29 Aug 2014)

You will have operated PAYE for most of the year based on the current allocation.

What is the current allocation?  If they are divided in two then with your wife earning €30k it's close enough to make little difference.


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## goosebump (29 Aug 2014)

My current allowance is €32,800. I am taxed as a single person.

I know that for the entire tax year there will be little difference.

My question is whether or not I can obtain an increased allowance month on month so that I can obtain the benefit between now and the end of the year, rather than as a rebate.


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## mandelbrot (30 Aug 2014)

If your taxed as a single person, I don't really understand what you think can happen?


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## goosebump (30 Aug 2014)

I am currently taxed as a single person. I intend to change to being taxed as a married person, where both spouses have income. I am trying to determine how much my monthly standard rate cut off band will be.


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## Joe_90 (30 Aug 2014)

On the basis that a married couple can earn €65,600 at the standard rate and your wife's income is €30,000 then you have €35,600 available to you in the current year but to be honest it's hardly worth your while as it's worth around €600 / 12 x 4 = €200 as the Certs will probably issue on a week one / month one basis.

Remember that you can claim the PAYE credit in your new employment.


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## goosebump (30 Aug 2014)

The annual tax liability isn't what concerns me here. I'm trying to figure how how my monthly take home pay will change when my wife indicates to the RC that I should receive her credits and band allowances.

At the moment, we are both taxed as single people. We each submit Form 11s at the end of the year in which we are jointly assessed so that we obtain any available refund by virtue of her not using all of her standard rate band.

I am trying to figure out what my standard rate band will be after she informs the RC that I should now have all her credits and allowances.

To date her total taxable PAYE pay is 21,676.

I am guessing that the RC will change my standard rate band from 32,800 to 41,800, and increase that by the 21,676 that my wife has received in taxable pay.

They will also augment my increase my credit from 3,300 to 6,600 (Married person + 2 x PAYE Credit)

At the date of my next pay cheque, they will recalculate my YTD income tax liability, using the new standard rate band allowance and credits, and make the necessary income tax deduction, which should be lower than my current deduction.

Any incomes my wife receives thereafter will be taxed at the full whack 41% with no credits.


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## Daenis (30 Aug 2014)

goosebump you can only have the band of 41,800 the extended rate band is not transferable to you and neither is your wife's paye credit.  Your wife will also have no entitlement to a paye credit on her earnings from your company.  It is also very likely that the changes would be put on a week 1/month 1 basis rather than a cumulative basis.  Likely outcome is you are given the 41,800 standard rate band and credits of 4950 (married personal credit & your paye credit), your wife gets a standard rate band of 23,800 and no credit with both of you on a week 1/month 1 basis.


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## goosebump (30 Aug 2014)

So if that's the case, the only way a PAYE couple can benefit from Joint Assessment is by submitting a request for Joint Assessment after the end of the tax year?ie you can't benefit month on month?

I'm looking at the Joint Assessment example here:

http://www.revenue.ie/en/tax/it/leaflets/it2.html#section11

Which shows the combined income of a couple with the €23,800 extension of the standard rate and the use of 2 x PAYE credits

Is this only possible outside of the PAYE system by retrospective assessment?

Also, why would we go on week 1/month 1 basis? All of tax details for the YTD are available to the RC.

I'm thinking maybe it might be better to continue being separately assessed until the end of the year, then claim a rebate for my wife's unused credits/band, and then start under Joint Assessment in 2015.


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## Daenis (31 Aug 2014)

In joint assessment the only amounts that one spouse can transfer to the other is 9000 of the standard rate band (which is why your rate band could increase from 32800 to 41800) .  The other 23,800 of the rate band is not allowed to be transferred even in the circumstances where the 2nd earner has an income of less than 23,800.  In other words the full 65,600 cannot be allocated to your employment.

The reason they might put it on a week 1/month 1 basis is to avoid a negative pay situation for your wife when the reduced rate band is implemented.

As others have said if your wife's total earnings for the year will be 31,676 there will be very little unused rate band to transfer to you and her credits will be fully utilised as 3,300 credits only cover 16,500 of income.

The way you are currently set up on the RC is very important though because if you are already linked as married and set up as either separate assessment or separate treatment then you can't change your basis of assessment for this year anyway as a change has be done before 31 march.


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## goosebump (31 Aug 2014)

Daenis said:


> In joint assessment the only amounts that one spouse can transfer to the other is 9000 of the standard rate band (which is why your rate band could increase from 32800 to 41800) . The other 23,800 of the rate band is not allowed to be transferred even in the circumstances where the 2nd earner has an income of less than 23,800. In other words the full 65,600 cannot be allocated to your employment.



Yes, but based on the RC's own example, the 23,800 (or lower of income) is used when calculating a couple's "joint" tax liability. This is the bit I find confusing ie that together, you are entitled to a standard rate band of 65,600, but that this can't be accommodated month on month by the PAYE system.



Daenis said:


> As others have said if your wife's total earnings for the year will be 31,676 there will be very little unused rate band to transfer to you and her credits will be fully utilised as 3,300 credits only cover 16,500 of income.



That may or may not be the case.

Whether my wife is paid from our proprietary company depends on our disposable income.

If we don't make any payment, she will have a sizeable chunk of unsed standard rate band and credits.

I guess I will have to wait until the end of the year and then make a claim for a refund based on joint assessment.


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## mandelbrot (31 Aug 2014)

You've made something that isnt all that complicated, very complicated. 

What do you actually want to do?!

As far as I can tell its maximise the weekly household take home pay. If you are already joint assessed for this year, you do that by assigning the maximum rate band and credits to the spouse whose income you know will exceed that amount, so in your case you assign it all to you up to the 41,800 (or your gross pay if it will be less than that). The remainder of the rate band and your wife's PAYE credit go to her.

However, since you've said you're separate assessment for 2014 there's nothing you can do now, you need to sort out joint assessment for 2015. 

Thread over.


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## T McGibney (1 Sep 2014)

mandelbrot said:


> However, since you've said you're separate assessment for 2014 there's nothing you can do now, you need to sort out joint assessment for 2015.


Can they not opt for joint assessment for 2014 anytime between now and 31 December?


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## llgon (1 Sep 2014)

T McGibney said:


> Can they not opt for joint assessment for 2014 anytime between now and 31 December?


 

I think the answer is no. According to the Revenue website a couple must elect for joint assessment before April 1st of the relevant tax year

http://www.revenue.ie/en/tax/it/credits/married-persons-taxation.html#section3


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## Sophrosyne (1 Sep 2014)

The April 1st date refers to an election for a change of assessable spouse, s 1019.

A couple may opt to be jointly assessed at any time during the year, s 1018 (1)

However, Goosebump, since you don’t know what your wife’s income will be for 2014, an election for joint assessment and switching around rate bands and credits is not a good idea.


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## goosebump (13 Sep 2014)

Sophrosyne said:


> However, Goosebump, since you don’t know what your wife’s income will be for 2014, an election for joint assessment and switching around rate bands and credits is not a good idea.



Agreed. I'm going to apply for a refund on the basis of joint assessment in Jan 2015.


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