PAYE, but now getting extra income that's not taxed at source. Help appreciated

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flyingalexf68

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Hi all
I am a PAYE worker but after getting a new qualification I am now getting an extra payment related to my job, but it's not taxed at source. The amount will vary every month and it's paid straight into my bank account from a different source than my normal wages. It is essentially called 'professional fees'. The expected total extra earnings will be around 12k for the year. My normal PAYE salary is 40k.
Will I be paying the full rate of income tax on that extra money if I just declare it at the end of the year? Is it possible to write off some of the tax burden by covering costs for equipment and travel or vehicle expenses?
I have a colleague who gets the same extra payment and has done for years, but she is taxed 20% at source. When I asked about this the accounts dept said they are no longer doing this for new staff on the scheme. I don't want to cause any issues so haven't discussed it much with my colleague.
Advice appreciated.
 

It sounds pretty much that your employer should be operating PAYE/PRSI/USC on that extra income. Not doing so could open up a world of pain for you and especially for them.

You should ask them why this dodgy-sounding "professional fees" approach is being pursued. Unless you get a convincing explanation, be prepared to walk away.
 
Very strange.

Are they trying to save on Employers PRSI or pension contributions?

Companies sometimes got into bad habits in the past and find it difficult to discontinue them.

Agree with Tommy. Tell your employer that this is not a good idea.

Maybe consult an accountant who will write you a letter advising against it.

Brendan
 
Sorry, should have explained better. I’m a civil servant, and the extra payment is coming from a different government department. I know it might sound a bit dodgy but it’s above board. Just seems like it would be too much work for payroll staff to sort the tax out for me as it’s never a set amount of money.
 
Can't advise re the offset of equipment or expenses; you'll need someone more knowledgeable than I for that.

But I also have another income stream that is not taxed at source; it my case it's a fixed amount, so I notified Revenue & my tax credits were adjusted.

You won't pay any more or less tax for paying it in an annual lump sum; but sometimes it's easier to have it handled via tax credits.
 
Still sounds dodgy. Revenue are likely to take a dim view of it, unless you're genuinely setting up as a business or more particularly a professional practice, and this department is your first client. In that event, you'll need to register with Revenue from the outset and also take into account the effect that Professional Services Withholding Tax will have on you and your cashflow.

Otherwise it might be simpler to negotiate on the basis that they'll operate PAYE/PRSI/USC on the amounts you earn.
 
So I am working in the Department of Justice and am subject to PAYE.

But I consult for the Department of Culture from time to time?

I would imagine that if you do this, then it's unlikely that you will get into trouble for it.

I presume that they have cleared it with the Revenue.

Brendan
 
Big presumption Brendan. @flyingalexf68 should get it in writing that they have.
 

Can you explain the exact arrangements here? Is it a contract or maybe a non-taxable allowance perhaps? You have described it as a 'scheme', is it outside the remit of your existing contract i.e. is it in addition to your normal hours or is it part of it? It sounds very unusual for the CS to engage an existing civil servant on a private contract. And it sounds even more unusual for a CS payroll office to ignore the appropriate tax arrangements such as professional services withholding tax?
 
flyingalexf68 said:
Will I be paying the full rate of income tax on that extra money if I just declare it at the end of the year? Is it possible to write off some of the tax burden by covering costs for equipment and travel or vehicle expenses?
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If the extra work is still part of your job they should be supplying any relevant equipment to you I would have thought - why are you having to purchase it yourself?

Also is there potential for the working time directive to be breached if you are working sigificantly more than a single full time job?
 
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flyingalexf68 said:
Sorry, should have explained better. I’m a civil servant, and the extra payment is coming from a different government department.
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This sounds very strange.

Secondments and loan arrangements within the civil service are common.

But someone being an employee of one government department and doing paid consulting for another one is something I’ve never come across.
 
flyingalexf68 said:
Sorry, should have explained better. I’m a civil servant, and the extra payment is coming from a different government department.
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A member of my family worked for the Civil Service in a similar situation - main job in one Government department with occasional work for others - and all income including the occasional "external" income was subject to tax and other relevant deductions at source. Your arrangement sounds strange as others have also pointed out.
 
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Thanks for the replies. It’s obviously an unusual way of getting paid and I’m probably not explaining it very well.
I looked at the Professional Services Withholding Tax on Google. Looks like I should be stopped that tax 20% by payroll upfront but I’m not. I’ll fire off a few emails to hr and payroll people. I’ll also pay for some advice from an accountant.
 
ClubMan said:
main job in one Government department with occasional work for others
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Were they a full-time employee of one department and doing occasional work for others? I've never heard of this but I can imagine part-time employment with one department and occasional work for others.


flyingalexf68 said:
I’m probably not explaining it very well.
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Have your duties changed? Or is there another government department that pays you an allowance simply because you have achieved a specific professional qualification? I've never heard of the latter but it is possible.
 
I wish someone would give an example because I find it hard to understand.

I am thinking I work for the HSE in hospital A and get a qualification to sterilise operating room equipment. I used to be paid €40K to clean the operating rooms 9-5 M-F. So now I spend every morning cleaning but every afternoon sterilising. Since hospital B and C have no one with this qualification, hospital A sends me to hospital B every Monday afternoon and hospital C every Friday afternoon. Hospital A bill each of them €6K, and when they get the €12K they give it to me. In reality I only work in hospital A 4 days a week for €40K and they have has to employ another person to clean when I not there.

I just don’t get it.
Your qualification means you are doing higher level work and your salary should reflect your new grade. Why would you not get a raise for this new qualification.
If you are being sent to other locations to do your new job, are you still on the clock for your current job. If you had an accident, are you an employee or a sole trader. If you are on the clock with your current employer why are you getting these extra fees rather than getting a higher wage.
Is the tax-payer thinking there are x people in dept A doing this job but the civil service is encouraging or telling them to moonlight for another dept, but still telling the public you are a FTE worker in your current department.
If the other department are contracting you as a sole trader why are they not negotiating and paying you directly?
And what about your pension? You will get it based on €40K and not €52K
 
ClubMan said:
Yes. Working in a Government department full time and occasionally doing interviewing work for the Public Appointments Service.
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The Public Appointments Service doesn't pay serving public servants for sitting on interview panels, but they do pay retired ones.
 
Mocame said:
The Public Appointments Service doesn't pay serving public servants for sitting on interview panels, but they do pay retired ones.
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Ah, I must've got the timeline wrong so and they were actually retired already and in receipt of their pension and additional Public Appointments Service income, both taxed at source.
 
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