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.

You get further information about refunding Pay Related Social Insurance (PRSI) from the Department of Social Protection (DSP).

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 tax and USC 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 DSP
  • or
  • are being taxed on a cumulative basis.

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.

Tax refunded to an employee

If you make a refund of tax and USC to your employee, you should report this in the payroll submission. This will then be reflected in your monthly statement. Your liability for that period will be reduced accordingly.

Refunds due to irregular payment of emoluments

Where an employee receives irregular payment of emoluments, and they are not in receipt of any payment during December, you may:

  • refund them Income Tax
  • and 
  • refund them USC in the last month of the year. 

You can only refund Income Tax and USC if you have received a cumulative Revenue Payroll Notification for them.