What rate of income tax will apply to my income?
Income tax is charged on employment income arising in Ireland. The standard rate of tax is 20% and the higher rate of tax is 40%. The tax rate applicable to your income will depend on your circumstances and the standard rate cut-off point (SRCOP) and tax credits that Revenue issue to you. The SRCOP is €33,800 for a single person and for €67,600 for a married couple/civil partners with two incomes for 2017.
What are tax credits?
Tax credits are used by employees to reduce their tax liability. Each employee is entitled to an annual personal tax credit of €1,650 and most employees will be entitled to the PAYE (Pay As You Earn) tax credit of €1,650 also. However there are some exceptions to who can claim the PAYE tax credit. Additional tax credits may apply depending on your circumstances. Tax credits are not refundable.
What is a tax credit certificate?
A tax credit certificate is a certificate issued by Revenue to an employer in respect of each employee which states the annual, monthly and weekly tax credits and SRCOP allocated to that employment for PAYE and USC purposes. It also confirms whether or not PAYE should be operated on a Cumulative or Week 1 Basis. Employees are also issued with a copy of their tax credit certificate from Revenue.
What is emergency tax?
An employer is obliged to operate emergency tax on an employee’s income in certain circumstances. If an employee has given their Personal Public Services Number (PPSN) to their employer and they have not been issued a P2C they are given a single person tax credit and rate band for the first few weeks of employment. An employee’s income will be taxed at the standard rate until week 8 and then taxed at the higher rate.
If an employee hasn’t provided their PPSN to their employer they will be taxed at the higher rate of tax with effect from the first week and will not receive any tax credits or any rate band.
The emergency rate of USC of 8% applies to all income, irrespective of whether or not a PPSN was supplied.
What are flat-rate expenses allowances and who can claim them?
Flat-rate expense allowances are a form of tax relief available that employees can claim for expenses incurred in the performance of duties in their employment. Employees must incur these costs and the costs must be directly related to the nature of their employment. Flat-rate expenses are available to a wide range of professions.
Details of the flat-rate expense amounts that can be claimed can be found here.
What is USC and what rates of USC apply?
Universal Social Charge (USC) is a tax charged on total income.
If an employee’s total income for the year is €13,000 or less then they are exempt from paying USC. However, if it is more than €13,000, USC is payable on their full income.
Reduced rates of USC apply to some people who are aged 70 or older or to individuals who hold a full medical card at any time during the year and their total income is €60,000 or less.
The USC rates that are applicable in the year 2017 are as follows:
|Standard Rates||Reduced Rates|
|First €12,012||0.5%||First €12,012||0.5%|
What is PRSI?
PRSI stands for pay related social insurance. PRSI contributions go to the Social Insurance Fund which helps pay for social welfare benefits and pensions.
Who is liable for PRSI?
Individuals aged 16 or over and under pensionable ages must pay PRSI if they are:
- Employees, whether full-time or part-time, earning €38 or more a week,
- Self-employed workers with an income in excess of €5,000 in a year from all sources.
There are some exceptions to this rule.
Employers of the above employees are liable for PRSI contributions on the reckonable earnings of the employee.
What is Local Property Tax?
Local Property Tax (LPT) is a tax which is payable on the market value of a residential property located in Ireland.
Is LPT a statutory tax deduction that must be paid from an employee’s salary or pension?
No, LPT is not a statutory tax deduction that must be paid from an employee’s salary or pension. However, LPT may be deducted from an employee’s salary or pension:
- Where the employee elects on their LPT return to have all or part of their LPT liability deducted from their salary or pension, or
- Where Revenue enforces the collection of LPT via the salary or pension of an individual where the individual has failed to make a LPT return or has failed to pay their LPT liability by other means.
What is a P45?
A P45 is a statement of an employee’s pay and deductions for the year up to the date they leave their employment. The deductions in the statement will include any PAYE, PRSI, USC and LPT that was deducted during that year of employment. A P45 is issued to an employee when he/she ceases employment, is granted a career break or dies while in employment.
What is a P60?
A P60 is an end of year certificate of an employee’s annual pay and the amounts of PAYE, PRSI, USC and LPT deducted during the year. An employer must give a P60 to each employee who was in employment on the 31st December. A P60 should be issued to employees between January 1st and February 15th.
What is benefit-in-kind?
A benefit-in-kind (BIK) is any non-cash benefit of monetary value that an employer provides to an employee. The benefit has monetary value so it must be treated as taxable income. BIK is subject to PAYE, USC and PRSI. Benefits can include provision of a company car, medical insurance, provision of accommodation, etc.
There is a once-off tax free benefit that can be given to employees annually, for more information on this small benefit contact us at TriPro and we will provide you with the necessary information.
Is the reimbursement of actual expenses incurred on behalf of an employer by an employee in the course of employment taxable?
No, where an employer is reimbursing an employee for actual expenses incurred by the employee during the course of employment the amount being reimbursed to the employee is not subject to tax.
Are motor travel and subsistence rates taxable?
An employee who is required to use their own personal vehicle while on employer business can receive a tax-free travel rate from their employer. Revenue has approved travel rates based on the engine capacity of the vehicle and the distance travelled on business journeys during the year. These rates are known as the Civil Service rates.
Revenue has also approved subsistence rates that employers can pay to employees to cover the cost of meals and/or accommodation where employees are required to carry their duties of employment away from their normal place of work.
Any payments made to an employee for motor travel and/or subsistence rates that do not exceed the Civil services rates will not be taxable. However, where payments exceed the Civil Service rates the full amount is taxable.
The current Civil Service rates are attached here.
For more information on payroll and the services we provide, check out our Payroll Services page.