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What Is PAYE And How Does Apply To Me?

PAYE stands for “Pay As You Earn”. If you are an employee or receive an occupational pension from a previous employer, you normally pay tax through PAYE. Every time your salary is paid to you whether you are paid weekly, fortnightly or monthly, your employer deducts Tax, PRSI (Pay Related Social Insurance) and USC (Universal Social Charge) from your wages and then pays you the remaining amount. PAYE ensures that the yearly amount of PAYE that is due to be paid to Revenue is collected each pay date over the course of the year.
When you employer deducts PAYE from your wages, this amount is then paid directly over to Revenue. You can see the tax payments to Revenue through your “MyAccount” with Revenue.

How is PAYE Calculated:

PAYE is a combination of Tax, PRSI and USC. Here is a brief guide to the different tax types.

Tax: Your tax liability is calculated at two different rates. The standard rate is 20% and the higher rate is 40% tax. For example, if you are a single person your tax band for 2019 & 2020 is €35,300 per year. This means that your gross wages up to the amount of €35,300 is taxed at 20% and any amount in excess of €35,300 is taxed at 40%.
Your tax band is dependent on your personal circumstances. For a single parent the tax band is increased to €39,300 and for a married couple with one income, the tax band is increased to €44,300.

PRSI: The rate of PRSI charged is dependant on your PRSI class. PRSI contributions go to the Social Insurance Fund which helps pay for Social Welfare benefits and pensions. Each PRSI class depends on your age and weekly income.Click HERE for further details.

USC: USC rates for 2019 & 2020 are as follows:
Income up to €12,012 is charged at a rate of 0.5%
Income from €12,012.01 to €19,874 is charged at a rate of 2%
Income from €19,874.01 to €70,044 is charged at a rate of 4.5%
Income above €70,044 is charged at a rate of 8%

Reduced rates of USC are available for either individuals over the age of 70 year and aggregate income for the year is under €70,000, or individuals under the age of 70 who hold a medical card (not a GP Card) whose income is under €60,000. The rates of USC are then reduced as follows:
Income up to €12,012 is charged at a rate of 0.5%
Income above €12,012.01 is charged at a rate of 2%

Can I reduce the amount that is deducted?

Yes, you are entitled to claim tax credits, tax reliefs and exemptions to reduce the amount of tax you pay. These are based on your personal circumstances. Revenue issue you with a tax credit certificate each year which shows the tax credits that you are currently claiming. Your tax credits are applied to your wages on each pay date which reduces the amount of PAYE that is deducted.
For any tax credits or reliefs that may not have been claimed during a tax year can be claimed
at the end of a tax year.

Do you think you have overpaid through PAYE?

If you feel that you have overpaid through PAYE, simply complete our Online Registration Form and we do the rest. With our expertise we will ensure that you claim the maximum PAYE refund that you are entitled to. Plus, if you are not due a tax refund then there is no Fee. Don’t miss your chance for a tax refund and Apply Today for YourMoneyBack!