Tax Tips

PAYE Tax Explained

Guide to PAYE Tax System (Pay As You Earn):

Whether you’re starting work for the first time or are finally looking into your taxes, understanding PAYE is essential. After all, knowing how the Irish tax system works ensures you can better understand your payslip. Unfortunately, it’s all too easy to overpay on PAYE tax, which is why we’ve decided to help by breaking it down into understandable steps.

What is PAYE?

PAYE stands for Pay as You Earn and is essentially a tax that gets taken from your wages every time you get paid. Everyone, with the exception of the self-employed, is required to pay PAYE tax.

Before you receive your wages, your employer tallies up how much tax, USC and PRSI you should contribute and deducts it before giving you your pay cheque. They include your contributions on your payslips, so you can double check the amounts taken.

How do I begin PAYE?

You begin paying tax when you start any registered employment. All you need to do is provide your employer with your PPS number and they’ll register you with the tax office. To make sure you’re not emergency taxed, you should make sure they register you as quickly as possible.

How is the tax calculated?

Your income tax liability is calculated at two rates, the standard and higher rates. The standard rate is 20% meaning 20% of your wages is taken if you’re earning less than €42,000 a year.

Basically, if you’re paid monthly and make less than €3,500 gross a month or are paid weekly and make less than €807.69 gross a week, 20% of your income is taken in tax. If you make anything over €42,000, 40% of the excess amount is also taken.

Can I reduce my PAYE contributions?

Luckily, you can reduce the amount of tax deducted each pay period. Tax credits can be used to offset some, if not all, of the taxes you need to pay. Your tax credits will be automatically applied each pay period, saving you money in taxes.

What if I‘m charged too much tax?

If you think you have overpaid tax or USC, then you can claim a tax refund for up to four years afterwards.

You may need to update the Revenue Commissioners of changes in your personal circumstances and update any tax credits you’re eligible for, before they process a refund. That’s why an easier solution is to simply fill out our 60 second application form so our experts at Irish Tax Rebates can complete the rest of the process for you!

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1. Authorisation to act as agent

I, the undersigned, declare to the Revenue Commissioners of Ireland, that I authorise

Irish Tax Rebates (TAIN 66436K)
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to act as my agent in dealing with all aspects of the filing of my Irish income tax return, including the submission of refund or credit claims, allowances or reliefs.

I confirm that all documentary evidence of entitlement to credits/reliefs claimed and taxable income sources, will be held for a period of 6 years, beginning at the end of the year of assessment to which the Return of Income and/or claim relates, by myself.

I confirm that this authorisation will remain in force until Revenue is formally notified of its cessation by either myself or Irish Tax Rebates, or for a maximum period of 4 years.

2. Authorisation for Agent to receive refunds on behalf of client

I authorise the transfer of any refund or repayment of PAYE/Income Levy/Universal Social Charge due to me by the Revenue Commissioners by electronic funds transfer to the following bank account which is held by Irish Tax Rebates:

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IBAN Number: IE55AIBK93336808365254
Name of Account Holder: Irish Tax Rebates

I understand that any refund made by the Revenue Commissioners to my agent, Irish Tax Rebates, on my behalf is refunded in a similar manner as if same were being refunded directly to me and that once the refund is transferred into the bank account nominated by me I have no further call upon the Revenue Commissioners in respect of same. I understand that Irish Tax Rebates is acting as my agent and is solely responsible to me in respect of any refund received by them on my behalf. I further understand that my agent Irish Tax Rebates is an independent entity and that the Revenue Commissioners make no endorsement of my agent or any such agency and cannot accept any responsibility whatsoever for problems encountered by me in dealing with them. I understand and agree that Irish Tax Rebates will input its own bank account details on the Revenue record for the duration of this mandate and will remove these details on the cessation of the mandate. I confirm that I am aware of, and agree to, the payment of the fees charged by Irish Tax Rebates in respect of the services carried out on my behalf and that this fee will be deducted from any amount refunded by Revenue and that the balance of this amount will be paid to me.

3. Terms and Conditions of Authorisation

I understand that Tax law provides for both civil penalties and criminal sanctions for the failure to make a return, the making of a false return, facilitating the making of a false return, or claiming tax credits, allowances or reliefs which are not due. I confirm that I will provide the necessary documentation to Irish Tax Rebates to support any refund, credit claims or claims for allowances and reliefs made to Revenue on my behalf of Irish Tax Rebates. I confirm that I will provide details of all my sources of income to Irish Tax Rebates.

I understand that I am required to retain all documentation relating to any refund or credit or allowance or relief claimed by the agent on my behalf for a period of 6 years beginning at the end of the year of assessment to which the Return of Income and / or claim relates, and that Irish Tax Rebates will be required to produce same to Revenue upon request.

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