Emergency Tax and Balancing Statements

In February of 2007, I asked this question about Emergency Tax and PAYE. I continued to work that job (20 hours a week, at, I think, about €16 an hour) for all of 2007 and until the end of February 2008, when the company wound down.

I was on Emergency Tax for absolute ages (possibly until June), although from then and for the first three months of 2008 (until the job was over), I had no taxes taken out of my cheques at all - I assume to make up for the emergency withholdings. My P45 shows a monthly tax credit of €293.33. Unfortunately, I don't really know what that means.

From March of 2008 I became self-employed. I did not pay tax in 2008, as my year 1/ year 2 taxes are not due until October 2009.

I have just requested a balancing statement for 2007 from the Revenue. They didn't seem to want to send me one for 2008; the woman just kept saying "You paid no tax in 2008."

My questions are:

1) At that pay rate, and as my family's sole income earner that year (married, no kids, I get the tax credit), would I have been due to pay any tax at all or should all of those Emergency Tax withholdings come back to me?

2) If my balancing statement shows I am due money for 2007, would that normally be applied as a credit to my 2009 taxes, or would they send me a nice big cheque? (I would actually prefer credit against my 09 taxes...)

3) How long does a balancing statement take to arrive by post? (I assume this will all be much clearer then.)

I'm sorry if these are really ridiculous questions but this will be my first year actually filing in Ireland. Thank you.

1) If you had pay of €16/hr x 20/hr pw = €320. Gross Tax would be €64. Tax Credit is €67pw (€293.33*12/52) so that covers the tax due, result no net tax. So if the emergency tax deducted was not repaid to you and you had no ultimate liability then the Bal Sta for 2007 should show a refund.

2) PAYE balancing statement refunds are paid by cheque. Not easy to set against self assessed taxes as PAYE and self-assessment on 2 separate systems. You could though get the cheque and then pay a prelim payment to Revenue for self-asst.

3) If submitted by post could be anything from 4 to 6 or more weeks but it varies a lot.

Oh, fantastic, someone who knows what they are talking about (because I do not.) Thank you!

Graham_07 said:

1) If you had pay of €16/hr x 20/hr pw = €320. Gross Tax would be €64.

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OK, €64 being a flat 20%. That makes sense.

Does that mean that the Tax Credit of €67 per week, or €3484 per annum, should reflect all of my tax credits for that year? Because I thought Married Person (3,520) plus PAYE (1,830) came to more than that, even in 2007. If that is the case can I get them to retrospectively correct that?

If so could I also retrospectively apply for rent relief for that year? I don't think I knew it existed then.

Once credits exceed tax due, then any tax paid would be refunded. Excess credits over tax due will not increase that. In othre words if your tax already goes to nil before rent credit then claiming rent credit will not change anything. However it's best to have the return reflect ALL items due in a year so I'd file the return with all claims due on and Revenue will compute. You are correct that the tax credits granted seem low as married + PAYE credits would be greater than you had but there might be some other deduction, i.e. was spouse in receipt of a social welfare payment that was taxable ? that would use up credits.

That's very clear and makes perfect sense; thank you. I will check my tax credits for that year when I get my balancing statement.