(3) Understanding Your Employee’s Tax Credits
When calculating your employee’s take-home pay, you need to take into account any tax credits, allowances and reliefs that apply as these will reduce the amount of Income Tax that must be deducted at source from your employee’s pay.
All employees are entitled to a basic personal tax credit however the value of this credit depends on each employee’s individual circumstances—for example, different rates apply depending on whether the employee is single, married or in a civil partnership, widowed, separated or divorced.
Your employee may also be entitled other specific tax reliefs or allowances such as the recently introduced rent tax credit. These must also be applied when calculating pay and issuing their payslip each pay period.
The Revenue Payroll Notification (RPN) that you receive from Revenue for each employee tells you the Income Tax and USC rates to apply.
A comprehensive list of the various personal and PAYE tax credits, allowances and reliefs is available on the Revenue website.
Need more information on tax credits and allowances or help with operating your payroll? Contact GroForth for details of our payroll services.