Change in Salaries policy - PRSI/PAYE implication

J

Josvill2010

Registered User
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87
Hi Everybody,

We are paying salaries a month in arrears. However, we would like to change it and get paid in the same month. Is there somewhere in the legislation where this will be disallowed?
What are the advantage of doing this?

Many thanks,
j
 
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Thanks Mizen,
Absolutely right, no material
You have nailed this. There would only one months tax free allowancea and EE would have to pay more taxes as result. EE will be better off if we didnt change the system but again it is better get the money today than in 6 months times if he was to leave, I suppose
 
Josvill, You are right..I think EE would prefer to get the money now rather than when he leaves and there is an additional month at that time. I would change it now, and get a few kodos !
 
Why not change the payment date from last to first day of month, then your employees won't be waiting for pay, but can use their next month's tax credits?
 
The Employees will never be short of money. It is the opposite. One month they will get two salaries at once
 
Yes but they won't get 2 x net salaries in one month because they won't have the tax credits to cover 2 month's worth of salary

Mrs Vimes method is clever and should work with no issues
 
I see what you mean now you are proposing to run two payrolls in the same month. One for the previous month at the beginning of the month and another one for the current month at the end of the month.
 
No, I am suggesting paying June's salaries as normal at the end of July using July's tax credits and July's salary on the first working day in August using August's tax credits. This assumes you are currently paying at the end of the following month (i.e. January's work is paid for at the end of February)
Sybil
 
...and then paying August's work at month end in August

Just so you know, we pay salaries around the 3rd week of the month. Following the above approach: one month we'l pay salaries twice, beginning and end of the month.

Next month, lets say Sept we will paying work done in Sept around the 3rd week in Sept.

I supposed the question here is August credits. I thought the sugguestion would solve the problem with the allowances. But if we are using the credits at beginning of August for July's work, when payroll runs August salary at month end (in August), we dont have any credits left.
 
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If you are paying for work done in August in the third week of August, then you are not paying in arrears. Paying in arrears would mean paying for work done in August in September. At present if a person leaves your employ on (say) 20th August you would have already paid them for the month of August and they haven't even worked it all!

The only way you would end up paying two salaries in one month is if you decide to pay a month in advance, i.e. pay for August and September in August. This would be most unusual.
Sybil
 
Sybil thanks for your help.
Currently we are paying for work done in June in the 3rd week of July ( almost two months in arrears strictly speaking)

My previous posting refers to the changes you were proposing. Where we move from paying in arrears to pay for work done in the same month. Back to your last point, if someone leaves on the 20th, he would have get paid more than he should.
 
Ah, that makes more sense (you previously said you paid for September's work in September - hence the confusion).
Ok, pay for June's work third week of July as normal, then pay for July's work on the first of August, rather than the third week. It's slightly in arrears, but the alternative is to have two months' pay and only one month's tax credits, which is likely to upset the employees!
 
Mrs Vimes,
Following your last post (post4) and to recap the proposal.
Action: 1st August we will pay for Julys' work. Then at the end of August (lets say 20th August) we will pay for work done in August.

Conclusion.

We will avail of two tax credit allowance in August. One for July's work paid on 1st August and second Tax credit allowance in August for work performed during August.
 
Josvill2010 said:
Mrs Vimes,
Following your last post (post4) and to recap the proposal.
Action: 1st August we will pay for Julys' work. Then at the end of August (lets say 20th August) we will pay for work done in August.
Click to expand...
No. That's not what is being suggested. If you pay for work done in the month of August before the month of August has finished (e.g. say the 20th of August), you open up a number of issues. Having a double payment in any month will have tax consequences that it's being suggested you try to avoid (I'd tend to agree, if I was to view this change as one of your employees).

What is being suggested...
> pay for June's work in the third week of July as normal
> pay for July's work on the first of August (not the third week of August as you are currently doing)
> continue to pay all future salaries on the 1st of the month, for the previous months work

This means that you have changed the date of payment so that it's far less in arrears (e.g. 1 day instead of 20 days), while not having the implications of a double payment in a single month (and the associated tax implications). So it's still not 'in the same month' as per your OP, but it's a preferable system to the existing one for your employees.
 
Mrs Vimes said:
Thank you Setanta, that's exactly what I mean.
Click to expand...
It's actually a very simple and clever (possible) solution to the problem (assuming it does suit the OP's needs), but one that many (I know I wouldn't have) wouldn't have thought of.
 
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