Exgratia tax deduction SCSB maternity leave

Hi

I have seen posts about this topic but they dont explain my problem. Basically SCSB is calculated using the average emulents of the last 36 weeks ...Where gaps in the service exist, it will be necessary to go back further than 36 months to determine the emoluments for the last 3 years of service.
My problem is that the company that calculates tax says I got 70 euros health insurance for the 4 months unpaid leave. Those were emulents so in my case they cannot roll back. And that means for 4 months my pay was 70!!! That decreases my tax free calculation a lot. Does this make sense? Has anyone gone through this before? Can I get advice on how I can challenge this?

https://www.askaboutmoney.com/threads/scsb-3rd-secret-of-fatima.202947/post-1513542

Think this note I had from Revenue explains it in same way as the tax advisor.

Hi JoeRoberts thanks for replying its still not clear to me ;( do they move the weeks in case if unpaid leave or not? As in charteredaccountants.ie/taxsourcetotal/1997/en/act/pub/0039/rp/sched3-1-rp.html. Where gaps in the service exist, it will be necessary to go back further than 36 months to determine the emoluments for the last 3 years of service. IT 94 1612.

To me I had a gap as I was in maternity leave unpaid but to the tax company no bc I got paid health insurance which is extremely unfair. so they said they cant move the weeks

umaamelie said:

As in charteredaccountants.ie/taxsourcetotal/1997/en/act/pub/0039/rp/sched3-1-rp.html

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Fixed link:

I read it as if any emoluments received however small it is not moved back. What type of insurance did you get paid and how was it treated as an emolument ?

Thanks! My weeks are not moved back because I was getting paid insurance. So they dont want to do this for me Where gaps in the service exist, it will be necessary to go back further than 36 months to determine the emoluments for the last 3 years of service. IT 94 1612. They are just putting 70 euros as my monthly salary to calculate the average for the 4 full months. Despite I was on leave.
I believe I am getting premium health insurance.

Who paid the health insurance to you ? Vhi/laya ? I'm not understanding this payment or why it was included as an emolument. Was it taxed ?

I receive the health insurance from my employer as BIK and subject to tax. Which is why it counts as emolument.and the only emolument while in the unpaid maternity leave.

Ok. No idea why it is called insurance or done as BIK but anyway you were paid so those weeks would have to be included despite the low amount. So no roll back as I see it.

Thanks JoeRoberts but I cant see it that way. I tell you why
"Where gaps in the service exist, it will be necessary to go back further than 36 months to determine the emoluments for the last 3 years of service. IT 94 1612."
So what is gap in service.
There is also another way to see it.
Tax law principles are fair, equal and clear.
Equal: In my case because I was getting health insurance while on unpaid maternity leave I am going to pay way more taxes than other colleagues in this collective redundancy. Just for the health insurance bit. Because the unpaid maternity leave without health insurance is rolled.
Fair: 17 years working for the company I see myself in an uncalled situation (redundancy) that happens near in a moment of my life where there was a time when I needed maternity leave. Now my salary avg is half of what it normally is not bc of the maternity leave, no, this is covered in precedent schedule 3, but bc of the health insurance.
Clear. You will not find this case or example specifically documented anywhere. Despite the number of people affected by this. So in your point if view you can see all emulents have to be added. In my point of view I only see gap in service as the key.
Does getting health insurance as BIK stop unpaid leave or sick leave etc , career break from being a gap in service? But it is a gap oherwise? My service is the same. 0 my gross is the same. 0.
Is this clearly documented with your point of view or mine as such?

There is more. Social welfare penalises on lumpsump on the gross exgratia deducting jobseekers number of weeks. I will be getting the same penalty as other colleagues that will get the same gross exgrstia as me but I will pay way more taxes. Bc of the health insurance.
By the way I even never used the health insurance but If I did I would not even be using tax payers money.

And I believe you are probably correct that is what they will do to me at the end but I strongly believe this needs to be challenged and changed.

But unpaid maternity leave while receiving no pay but receiving other benefits in kind (in this case health insurance paid by the employer) isn't a gap in service. You were still employed by the company during that time. Have you sought independent professional tax advice on the issue?

umaamelie said:

Now my salary avg is half of what it normally

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This doesnt look right for losing 4 mths out of 36 for calculating the average.

I think the redundancy taxes are very fair and genrrous. They brought in the roll back period for a situation where someone is penalised for a period gap with no income. But you did have a small income. Checking whether that insurance should have been treated as income for the 4 months in the first place is your only way to proceed here. I dont understand what type of insurance it was and have never come across it before. Maybe insurance is not the right term and it was just a maternity salary topup payment.





Ok, I see now that it was bik on a insurance policy rather than a payment.
That's a bit more tricky. In that case I would exclude that period if I was doing the scsb and argue that the bik related to an annual policy rather than a monthly policy.

Joe Roberts- To me it sounds like standard health insurance paid by the employer. I have had this in 2 companies now. In the first it appeared on my payslip as Fixed and variable payments- BIK health. Further down the same amount is called 'notional pay'. In my current company it does not appear on payslip as far as I can see. In my case it is payable for all protected leaves, maternity, paternity leave etc including unpaid leaves.

OP it seems very unfair that you would be effectively penalised for being on unpaid maternity leave, despite the technicality of the small BIK. The principle in most cases is that these types of leaves should not leave you worse off outside of the agreed unpaid salary - eg you accrue BH and AL during this time, and in this case your health insurance benefit continued. Are they including this accrued leave in the SCSB calculation too, as it effectively is an emolument?

I would imagine this sort of case has come up before, as a lot of large multinationals offer health insurance and BIK is of course charged. They are the companies that are paying more than the standard severance payments and probably tend to have a workforce in the childbearing years. It may not have happened in this company, which is why they are being cautious.

One thing that is unclear, how exactly did they charge the BIK, was it on return from unpaid leave as a bulk charge on your first pay? Although you had the benefit of coverage during this unpaid period, Revenue would always argue that date of payment is the relevant one for taxation - ie I pay 2025 tax on my bonus related to 2024, if I get backpay in 2025 for 2024 I pay 2025 tax on it.

I do recall in my payroll days that we often did an approximation of tax on severance payments, taking the conservative approach. If the employee had overpaid, they could reclaim it from Revenue and the company was never at risk of not withholding enough tax. In another firm I worked in, they didn't allow any tax relief on the first tranche of severances, directing employees to submit a tax return for overpaid taxes. Obviously this caused a lot of issues and eventually they changed their methods. By the time it came to me in a later tranche they had started allowing them and in my case I had nothing to reclaim as it was done by the company correctly (which I was able to validate by my payroll experience).

So what I am saying is, all is not lost even if your employer is calculating your tax reliefs this way, you can still argue your case with Revenue as they are the final agency which can confirm the correct tax reliefs and refund you if you have overpaid.

I would even go so far as to ask your employer for independent external advice on this. There may be a firm that specialises in this sort of calculation and has seen the facts of your case before and can confirm the correct outcome.