Refunding tax and Universal Social Charge (USC)

You may refund tax and USC to an employee under certain circumstances.

You must record any refunds made in the employee's payroll record.

Advice about refunding Pay Related Social Insurance (PRSI) can be found in the Department of Employment Affairs and Social Protection (DEASP) guide.

Reasons to refund tax and USC

Refunds due to the cumulative basis

Your employee's cumulative tax credits might be more than the cumulative tax due in a particular pay period. In this case, you do not deduct tax from their pay for that period. You may have to make a refund of some of the tax paid by the employee earlier in the year.

Refunds due to absence

An employee may be absent from work, for example if their place of work is temporarily closed, or if they take unpaid leave.

You may refund an employee the tax and USC paid in this period if they:

  • are not entitled to receive any pay on the usual pay day
  • are not entitled to receive any taxable benefits from the DEASP
  • are being taxed on a cumulative basis.

You may refund the employee on that pay day. You apply their cumulative tax credits and tax and USC cut-off points to their cumulative pay on that date.

Refunds due to ceased employment

If your employee has stopped working for you and they are now unemployed, then you do not refund them. We will refund any tax and USC due to them.

If your employee has changed jobs, their new employer will refund any tax and USC that they may have overpaid.

Claiming back refunded tax

If you make a refund of tax and USC to your employee you may claim that back. You should deduct the amount refunded from the next payment of tax and USC to be paid to the Collector General.

This may not be an option if the next payment of tax and USC is less than the amount you refunded. In this case, you may contact us for a repayment of the tax and USC refunded. You will need to give us your registration number and the details of the refunded amount.