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P60 Error puts thousands at risk of being taxed twice

Revenue have invested millions of euro over the years developing their online systems to make doing your taxes easier. However, using Revenue’s PAYE Anytime system relies heavily on you have a good understanding of what you are entitled to claim. This has become particularly evident in yet another Revenue error we’ve recently discovered.

What is happening is caused by confusion over the correct P60 figures to enter into PAYE Anytime has resulted in PAYE Anytime users being double taxed on their Illness Benefit income.

Let me tell you more….

Which is the correct P60 figure?

It’s the most trusted of all tax documents – the P60 – but it is this very document that could be leading to you paying double the tax on your Illness Benefit income.

The P60 displays a figure to be used in PAYE Anytime (as shown below), which includes any Illness Benefit received in the year. However, the Illness Benefit figure is already listed on an individual’s tax record in PAYE Anytime as a separate income source, therefore if the P60 figure is used, the individual will be taxed twice on their Illness Benefit income.


Example of P60 with figure to be used for PAYE Anytime

Example of P60 with figure to be used for PAYE Anytime

The extract above from a P60 shows how the P60 instructs this tax payer to include the estimated illness benefit in the pay amount declared.  The Person’s pay is 12,213, excluding the illness benefit.

As the Illness benefit is already separately declared in the PAYE anytime system, you would be double taxed on the €6,204 of illness benefit if you entered the 18,415 to your tax record as instructed clearly on the P60 in the line “Use this figure in PAYE Anytime”

Another point to note is that the Illness Benefit estimate the employer receives and shows on the P60 is rarely correct – in this case the correct illness benefit amount was significantly different at in the region of €3,000.

How does this happen?

This error particularly poses a problem for people who like to get in early to review their taxes as soon as they get their P60. Revenue’s online systems don’t get updated with employer P35 details until around March/April, therefore no employment income information will be present, however the Illness Benefit income will be.

After the P35s are updated in Revenue’s system, the income figures are corrected. However, potentially thousands of taxpayers have been caught in the net and may have been unknowingly double-taxed as a result of this error.

Examples we’ve seen

We’ve had several clients come to us this year after receiving Demand Notices from Revenue for additional takes to be paid. However, once we have independently reviewed their tax record, we’ve identified the error and correct their taxes.

There has even been an instance for one client who paid the additional taxes, but when the employer P35 had been updated and corrected the error, Revenue failed to issue a refund for the overpaid taxes to the client.

Should you attempt to review your own taxes?

My belief is that if you are up to date and have a good understanding on all your tax entitlements, then reviewing your own taxes is possible. However, Revenue’s PAYE Anytime system does not provide an outcome estimate once you have finished plugging in all your information – and to me, I would be very nervous about pressing that button at the end without knowing whether there is an underpayment or refund available.

Here at Red Oak, we independently review your taxes with our internal tax calculators first – so we can pick up things like the error above and correct them before triggering an underpayment unnecessarily. This gives our clients piece of mind that their taxes are in safe hands and that they’ll claim back every penny that is owed to them.



Written by John O’Connor

1-johnI’m the brains trust behind Red Oak Tax Refunds and started the company in 2009 because I thought there had to be an easier option for people wanting their taxes reviewed. My job is to make sure our team of Tax Agents have the latest information to help ensure our customers get the best possible refund outcome. I love numbers, but realise not everyone does!