Refunding Income Tax and Universal Social Charge (USC)

Note

The information in this section refers to current employer obligations. For employer obligation before 1 January 2019, please see Employers' Guide to Pay As You Earn (PAYE).

An employer may refund Income Tax and USC to an employee under certain circumstances. The employer must record any refunds made in the employee's payroll submission.

For information about refunds of Pay Related Social Insurance (PRSI), please see the Department of Social Protection's (DSP's) website.

Reasons to refund Income Tax and USC

Refunds due to the cumulative basis

An employee's cumulative tax credits might be more than the cumulative tax due in a particular pay period. In this case, the employer should not deduct tax from the employee's pay for that period. The employer 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 if, for example, their place of work is temporarily closed, or if they take unpaid leave. The employer may refund an employee's Income Tax and USC in this period if the employee:

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

The employer should apply the employee's cumulative tax credits, tax cut-off points and USC cut-off points to their cumulative pay on that date.

Refunds due to ceased employment

If an employee has stopped working for an employer and they are now unemployed, the employer should not refund them. Revenue will refund any Income Tax and USC due to the employee.

If an employee has changed jobs, their new employer will refund any Income Tax and USC they may have overpaid.

Tax refunded to an employee

If an employer makes a refund of Income Tax and USC to an employee, the employer should report this in the payroll submission. This will then be reflected in their monthly statement. The employer's liability for that period will be reduced accordingly.

Refunds due to irregular payment of emoluments

An employer may refund Income Tax and USC to an employee in the last month of the year where:

• the employee receives irregular payment of employments
• and
• the employee is not in receipt of any payment during December

The employer can only refund Income Tax and USC if they have received a cumulative Revenue Payroll Notification (RPN) for the employee.