(2) What You Need to Know About Emergency Tax
When you take on a new employee, you may not know what tax band they should be in as this can be affected by their individual circumstances and/or their earnings from a previous employment. Until it becomes clear what the employee’s tax situation is, you will need to deduct Emergency Tax from their pay.
Provided you know the employee’s Personal Public Service Number (PPSN), normal Emergency Tax rules will apply. This means that the single person’s Income Tax rate band (20%) applies for the first four weeks of employment and the higher rate (40%) then applies from Week 5 onwards.
If you do not know your employee’s PPSN, you will need to deduct tax at the higher (40%) rate from the outset.
While your employee is on Emergency Tax, an emergency rate of Universal Social Charge (USC) also applies. This is a flat percentage deduction (8% in 2023) that applies to all income.
When you receive a Revenue Payroll Notification (RPN) from Revenue for your employee, this will tell you the tax band, credits and tax rates that apply. This will enable you to take your employee off Emergency Tax.
Need more information on emergency tax or help with operating your payroll? Contact GroForth for details of our payroll services.