STARTING A JOB IN IRELAND: WHAT YOU SHOULD KNOW ABOUT TAX
As an employee, you are liable to pay tax on your earnings under the PAYE (Pay As You Earn) system. This means that your employer deducts the income tax, PRSI and the Universal Social Charge you owe directly from your wages. To ensure that your employer deducts the right amount of tax from your pay you will need to do two things:
- Give your employer your Personal Public Service (PPS) number. This number is your unique personal identification number for public services. Your employer will then let your tax office know that you have started work.
- Apply for a certificate of tax credits and standard rate cut off point. You will need to complete an application form to do this. It is called Form 12A Application for a Tax Credit Certificate. If you are registered with Revenue’s PAYE, you can check your tax credit certificate online.
To ensure that your employer and the tax office have time to sort everything out before your first payday, it is advisable to do this as soon as you accept a job offer.
The amount of income tax you actually pay depends on your earnings, your tax rate band and the amount of your tax credits. Tax is charged as a percentage of your income. The percentage that you pay depends on the amount of your income. The first part of your income, up to a certain amount, is taxed at 20%. This is known as the standard rate of tax and the amount that it applies to is known as the standard rate tax band. Earnings above this amount are taxed at the higher rate (40%).
Tax credits reduce the amount of tax that you are likely to pay. If your tax liability is less than your tax credits, you do not pay tax. If your tax liability is more than your tax credits, the tax due is the difference between the two.
Your employer must give you a payslip, showing a breakdown of your weekly, fortnightly or monthly salary and all the deductions made.