PAYE overpayments and underpayments of tax
PAYE overpayments and underpayments of tax
An overpayment of tax happens when you have paid more tax than you were liable to pay. If you have overpaid tax, you will get a tax refund. You must claim a tax refund within 4 years after the end of the year of the overpayment or you will not get the refund. To claim tax back you must get a Statement of Liability from Revenue.
An underpayment of tax is when you have paid less tax than you were liable
to pay. If you have paid too little tax, you will owe Revenue the difference
between what you actually paid and what you should have paid. You may not know
that you have paid too little tax, but you are still responsible for paying
Revenue if an underpayment of tax has occurred.
If you are a PAYE taxpayer and you are registered with Revenue's PAYE Services you can view your tax credit certificate online. You can do this using Revenue's myAccount Service online or on mobile and tablet devices using Revenue's RevApp. Your tax credit certificate will show the tax credits that your employer is deducting from your tax bill. If you find out during the year that your tax credits are not correct you should contact Revenue and any refund you may be due will be paid to you by your employer. It is also important to check you are not claiming tax credits you are not entitled to, as this will result in an underpayment of tax.
How to review your tax liability
From 1 January 2020, the way you review your tax for a previous year has changed. The P21 - End of Year Statement has been replaced by a Statement of Liability (see below).
To find out whether you owe tax or are due a tax refund you can:
- View a preliminary calculation of your tax liability using your Preliminary End of Year Statement
- Request a final review of your tax liability using your Statement of Liability
You can read more in our document about How to review your tax (PAYE taxpayers)
You can get your Statement of Liability for the last 4 years (you can only claim a refund of overpaid tax for the last 4 years). You can currently request a Statement of Liability for the years 2018, 2019, 2020 and 2021.
You can use your Statement of Liability in the same way as the P21, for example, as proof of income to a third party.
You may have overpaid tax if you become unemployed or are out of work sick. Find out more about claiming a tax refund if you are unemployed or out of work sick. You may also have overpaid tax if your tax credits are incorrect or you haven’t claimed tax relief for certain expenses. Find out more about the tax credits and reliefs you may be entitled to claim.
If you have overpaid tax, Revenue will refund you the overpayment by:
- Bank transfer: Your refund will be transferred directly to your bank account, if you provided your account details in ‘My Profile’ within myAccount or as part of your paper Form 12(pdf) return, or Form 12S(pdf) return (a simplified version for routine tax returns) or
- Cheque: You will receive a cheque for the amount overpaid by post
An underpayment will remain on your tax record with Revenue until it is paid. Your Statement of Liability will show if you have underpaid tax. It will also inform you how the underpayment will be collected. Usually, you will not pay money directly to Revenue. The easiest way for Revenue to collect the underpayment is to reduce your tax credits in the following year.
For example, if you get a personal tax credit of €1,700 and an employee tax credit of €1,700, your total tax credit for 2022 is €3,400. If you underpaid €90 tax in 2021, your total tax credit in 2021 will be reduced by €90 (€3,400 - €90 = €3,310). In this case, your total tax credit for 2022 will be changed to €3,310.
An underpayment can also be deducted from any tax relief you are due. For example, if you have underpaid your income tax by €100 but are also due to get tax relief of €400 on medical expenses, the underpayment of €100 will be deducted from the overpayment of €400 and you will get a refund of €300.
If you have a large underpayment which cannot be easily repaid by reducing your tax credits the following year, you can arrange to pay Revenue directly by cheque, banker’s draft or postal order. You can pay the total amount in one payment or in instalments. You will need to contact your local tax office about repaying the underpayment.
Outstanding tax due to Revenue can incur interest and penalties. If you refuse to repay tax that is due Revenue can take you to court.
Overpayments or underpayments of income tax or USC
Revenue has provided information on the taxation of payments under the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP). In 2020, these payments were taxable at the end of the year. In 2021, PUP was taxed as it was paid. The TWSS was replaced by the Employment Wage Subsidy Scheme (EWSS).
For 2020, your Preliminary End of Year Statement is available to view in myAccount. The statement gives you a preliminary calculation of your income tax and USC position for 2020. It tells you whether your tax position is balanced or if you have underpaid or overpaid your tax for 2020.
If you have an underpayment of taxes, the following applies:
- You can arrange to fully or partially repay the tax due through the payments/repayments facility in myAccount, or
- Revenue will collect the underpayment by reducing your tax credits over the following 4 years, starting in January 2022. You will not have to pay interest on any underpayment.
If you have overpaid income tax or USC, any refund due to you will be paid by bank transfer or cheque.
Where to apply
If you think your tax is currently being calculated incorrectly or you want to request a Statement of Liability, you can: