Glossary of Payroll Terms
AEO - Attachment of Earnings Order
ARTC - Age Related Tax Credit
AVC - Additional Voluntary Contribution – a voluntary contribution made by an employee to a pension scheme, in addition to any standard contributions provided for in the contract of employment.
BIK – Benefit In Kind – a benefit from an employer in a form other than a monetary payment (e.g. car, health insurance payment, hampers, etc.). BIK’s are subject to PAYE and USC and PRSI by both employee and employer. The employer is obliged to quantify the value of a BIK and subject it to PAYE, USC and PRSI through the Payroll system.
DJEI - Department of Jobs, Enterprise & Innovation
DSP - Department of Social Protection
EAT - Employment Appeals Tribunal
Form 12A – When an employee commences employment for the first time, they should complete Form 12A to apply for a Certificate of Tax Credits and Standard Rate Cut Off Point. www.revenue.ie/forms/form12a.pdf
Form P2 – Employee copy of Tax Credits, Standard Rate Cut-Off Point, Universal Social Charge and Local Property Tax.
Form P2C – Employers copy of employee’s Certificate of Tax Credits, Standard Rate Cut-Off Point, Universal Social Charge and Local Property Tax.
Form P2N – Allocation of Tax Credits and Standard Rate Cut-Off Point.
Form TRS 1 – Tax Relief at Source – Tax Relief on mortgage interest may be claimed by completing a form TRS1. The relief will then be granted by the Mortgage provider through reduced mortgage payments. Similarly, relief may be granted by providers of Medical Insurance at source for medical insurance premiums paid by individuals in respect of themselves, their spouse, children and dependant relatives. www.revenue.ie/forms/trs1.pdf
Gross Pay - Gross pay is the employee’s total pay including notional value of BIK before any deductions are made by the employer.
Income Tax - The income tax year is based on the calendar year 1st January to 31st December.
LRC - Labour Relations Commission
LPT - Local Property Tax
Med 1 – This form can be completed by an individual to claim tax relief at the higher rate of tax in respect of health expenses incurred. www.revenue.ie/forms/med1.pdf
Med 2 – Tax relief can be claimed for dental expenses by completing a Form Med 2. www.revenue.ie/forms/med2.pdf
National Insurance - a compulsory deduction of a fixed percentage of an employee’s earnings in the UK, allowing access to benefits and services such as the National Health Service (NHS)
NERA - National Employment Rights Authority
Net Pay - The amount of money due to an employee after all
Notional Pay – the term used to describe the monetary value of a BIK (Benefit In Kind), which is included in an employees gross pay for calculation of PAYE, PRSI and USC
P9/P11/TDC – Tax Deduction Card – issued by Revenue to employers to assist them in manually calculating the amount of PAYE payable in each period by an employee.
P21 – Balancing Statement – an employee can request a statement of earning and tax for the year from Revenue.
P30 – Monthly or Quarterly Return of PAYE, PRSI, USC and LPT by Employer to the Collector General due by the 14th of the month following the deduction from employees.
P35 - Employers end of year return to Revenue.
P35L – Annual End of Year Return containing details of earnings, tax paid, USC, LPT, PRSI payments, PRSI class(es), number of contributions and total contributions in respect of each employee and the employer in the tax year.
P35LF – form completed with year end return providing information on pension contributions for Retirement Benefit Schemes, Personal Retirement Savings Accounts and Retirement Annuity Contracts.
P35L/T – form completed with year end return for employees for whom the employer does not have a PPS number.
P45 – a cessation certificate issued to an employee by the employer if he ceases employment, is granted an authorised absence, career break or dies while in employment.
P46 - Notification to Revenue of employee details for whom a Tax Credit Certificate is required.
P50 – If an employee has been unemployed for a period of at least 4 weeks he may claim a repayment of income tax from Revenue by completing a form P50. www.revenue.ie/forms/p50.pdf
P60 – an annual certificate issued to employees by their employers. Each employee employed on the 31st December is entitled to receive a form P60 by the 15th of February following the end of the income tax year detailing their earnings, PAYE and USC deducted and PRSI deductions by employee and employer.
P333 – Notification of Employers PAYE Registration Number.
Parking levy - although not yet introduced, the parking levy is a tax which may apply where an employee has an entitlement to use a parking space in an urban area for the parking of a car and where such space is provided directly or indirectly by the employer. It will only apply in specific designated urban areas in Dublin, Cork, Limerick, Waterford and Galway cities.
PAYE – Pay As You Earn – the tax payable on income earned as an employee. Employers are obliged to calculate and deduct PAYE due from the wages or salaries of their employees through the payroll system as they are paid.
PHI - Permanent Health Insurance
PPSN – Personal Public Service Number – issued by an individual’s local Social and Family Affairs Office. Since 1971 every individual born in Ireland is allocated a PPS number at birth.
PRC1 – form completed with year end return in respect of employees who had more than two PRSI classes during the tax year.
PRD - Pension Related Deduction
PRSA - Personal Retirement Savings Account
PRSI – Pay Related Social Insurance – another tax payable by both employer and employee administered by the Department of Social & Family Affairs. The rate of PRSI payable depends on the personal circumstances of the individual and the amount of earnings.
RAC - Retirement Annuity Contract (private pension)
Reckonable Earnings - For the purposes of employee PRSI, reckonable earnings is an employee’s gross pay including the notional value of any BIK less any Revenue approved salary sacrifice. For employer PRSI purposes, reckonable earnings is reduced by the amount of PRD payable by public servants and by the amount of any share remuneration received by an employee.
Rent 1 – Tenants who pay landlords for private rented accommodation may be entitled to claim tax relief by completing a form Rent 1. www.revenue.ie/forms/rent1.pdf
ROS – Revenue On-Line System – a means to conduct transactions with the Revenue through the internet.
Schedule E Expenses – expenses that are wholly, exclusively and necessarily incurred in the performance of an employees duties. Tax Relief may be granted on Schedule E expenses.
SCSB - Standard Capital Superannuation Benefit
SRCOP – Standard Rate Cut-Off Point - the amount of income that is liable to tax at the standard rate of 20%. Any income in excess of the SRCOP will be liable to tax at the higher rate, currently 41%.
Taxable Pay - An employee’s gross pay less certain deductions approved by Revenue which are allowable for tax purposes, such as contributions to a Revenue approved Pension Scheme, PHI Scheme or deductions under an approved Salary Sacrifice Arrangement.
UK – HM Revenue & Customs (or HMRC) was created by the merger of the Inland Revenue and Her Majesty’s Customs and Excise in 2005. It deals with the collection of tax, national insurance contributions and VAT.
UK – Tax code: Each employee has a tax code to specify the way that PAYE income tax should be calculated and deducted from their wages. If an employee has more than one job, they can have a different tax code for each.
UK – P6: Tax code notice - P6 tax coding notices are issued to employers by HM Revenue & Customs to show tax code changes for their employees. They are usually generated by HMRC where they have reviewed an employee’s tax record & cu
UK – P11D: - Employers must use a P11D to tell HMRC about the value of any benefits in kind they’ve given to employees, including directors, who earned over £8500 during the tax year. This means benefits or expenses that effectively increase an employee’s income – such as a company car, private medical insurance or interest free loans. The employee pays tax on most benefits whilst the employer pays Class 1A National Insurance Contributions. A copy of the P11D must be provided to each employee affected, as this will be needed by them if they need to complete a self-assessment tax return. The P11D will generally be accepted by banks and building societies as proof of extra income for a loan or mortgage.
UK – P9D: (Expenses payments and income from which tax cannot be deducted) - Employers must use a P9D to tell HMRC about the value of any benefits in kind they’ve given to employees, including some directors, who earned less than £8500 during the tax year. The employee does not pay tax on such expenses, and the employer does not pay Class 1A National Insurance Contributions. Employees affected will need a copy of form P9D in order to complete their end of year tax return.
UK – P38S: Student Employees - A form issued to Students for work done in holiday periods only which allows a maximum gross pay (£6035 in 2008-2009) to be paid during those holiday periods, worked in any one year, without tax being deducted. National Insurance deductions are still made.
UK: P14 – End of Year Summary: The P14 is submitted to HM Revenue & Customs at the end of each tax year for each employee. The P14 includes the gross pay and deductions for tax & National Insurance.
UK – Statutory Sick Pay (SSP) is paid by employers to employees who are off work sick for at least 4 consecutive days. The employee will need to have earned above the Lower Earnings Limit for 8 weeks before the sick period.
UK – Statutory Maternity Pay (SMP) - This is a legal entitlement to a certain amount of pay to help a mother take time off around the time of birth and lasts for up to 39 weeks. A further unpaid period of 13 weeks is allowed as time off work. The employee will need to have earned above the Lower Earnings Limit. The qualifying period of employment is for a continuous period of at least 26 weeks up to and into the 15th week before baby is due. Fathers and adopted parents are also entitled to pay & leave.
USC - Universal Social Charge