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Understanding Your Payslip

Understanding Your Payslip

Understanding Your Payslip – Confused by all those terms on your payslip? Our resident payroll experts break down everything you need to know.

 

HOW TO READ YOUR PAYSLIP

PPS Number: Your Personal Public Service (PPS) number is a unique identifier used by certain state bodies for tax purposes and when you need to access social welfare benefits and public services and information in Ireland.

PRSI Class: The PRSI Class is usually dictated by a person’s employment and will influence the amount of PRSI contributions you pay. There are 11 different classes, here’s more info on classes and contributions.

Weekly/monthly cut off: The amount you can earn each time you’re paid before you have to pay the higher rate of tax. Every time you’re paid, you pay tax at the standard rate of tax up to your standard rate cut-off point.

PAYE: This stands for ‘Pay As You Earn’ and is a system of deducting income tax, PRSI and USC from your salary.

Tax Credit: Each individual is entitled to tax credits, based on their personal circumstances, e.g. if they’re married or in a civil partnership or are an employee (PAYE) or have certain tax credits, etc. Tax credits are allocated each year and tax is calculated as a percentage of your income. Your tax credits are deducted from this to give the amount of tax you’ll pay. Any unused credits are forwarded to your next pay period(s), so a tax credit will reduce your tax by the amount of the credit.

PRSI: PRSI is ‘Pay Related Social Insurance’ contributions which go towards Social Welfare benefits and pensions. Most people working in Ireland have to pay this with few exceptions. The amount you pay depends on your job, earnings, and what PRSI class you’re in. In some cases, you may be entitled to a rebate.

USC: The ‘Universal Social Charge’, is a tax that has replaced the income levy and health levy. You’ll pay this if your gross income is more than €12,012 per year.

Gross Pay: The total amount you’re paid before any deductions are made.

Net Pay: The total amount each time you’re paid after tax, PRSI, and other deductions.

Total Deds: The total amount of money deducted in that pay period.

 

Your Payslip explained

Your employer applies PAYE tax based on information from Revenue on your employee tax credit certificate. However, Revenue might not have the most up-to-date information on your personal status (marital status or dependants etc) which could result in the incorrect allocation of bands and credits. This means you may end up paying more tax than you need to.

If this is the case, you should make a claim at the end of the year as Revenue won’t know you’re entitled to additional relief if you don’t inform them of a change in your circumstances.

Year-end Underpayments

This can happen if you’ve been allocated tax credits you are not entitled to. Revenue will usually seek reimbursement over the course of the following year by making an adjustment to your tax credits.

What does that mean for you?

This means your take-home pay will be reduced until the underpayment is settled. Sometimes underpayments go unnoticed by Revenue for a number of years and the taxpayer is then faced with a much bigger underpayment.

What can you do?

When you get your next payslip, see what it says for your monthly / weekly tax credit and cut off point. Multiply this by 12 or 52 to determine your annual tax credit and cut-off point.

The most common cut-off points for 2022 are as follows:

  • Single / Widowed Person or Surviving Civil Partner without qualifying children – €36,800
  • Person qualifying for the Single Person Child Carer Tax Credit – €40,800
  • Married Couple or Civil Partnership – One Income – €45,800
  • Married Couple or Civil Partnership – Two Income  – €45,800 & €27,800*

*The rate band is capped at the lower of €27,800 or the income of the lower earner. This increase cannot be transferred between spouses or civil partners.

The most common Credits include:

Single/widowed Person or Surviving Civil Partner Tax Credit – €1700

Married Couple or Civil Partnership Tax Credit  – €3400

Widowed Person or Surviving Civil Partner in year of bereavement – €3300

Widowed Person or Surviving Civil Partner with dependent child(ren) – €1650

Widowed Person or Surviving Civil Partner without dependent child(ren)  – €2240

Additional relief for subsequent years after year of bereavement

With a Qualifying Child:

Widowed Parent bereaved in 2021 – €3600

Widowed Parent bereaved in 2020 – €3150

Widowed Parent bereaved in 2019 – €2700

Widowed Parent bereaved in 2018 – €2250

Widowed Parent bereaved in 2017

Widowed Parent bereaved in 2016

Single Person Child Carer Tax Credit – €1650

PAYE Tax Credit – €1700

Home Carer Tax Credit – €1600

Employed Person taking care of an incapacitated individual (max.) – €75000

Age Tax Credit – Single/widowed Person or Surviving Civil Partner – €245

Age Tax Credit – Married Couple or Civil Partnership – €490

Incapacitated Child Tax Credit – €3300

Dependent Relative Tax Credit – €245

Dependent Relative Income Limit – €14753

Earned Income Tax Credit – €1700

Interest – first-time buyers (allowable for first 7 years) single (max.) – €5000

Interest – first-time buyers (allowable for first 7 years) married or in a civil partnership) – €15000

Interest – first-time buyers (allowable for first 7 years) widowed person or surviving civil partner – €10000

Interest – non-first-time buyers single person (max.) – €1500

Interest – non-first-time buyers married or in a civil partnership – €3000

Interest – non-first-time-buyers widowed person or surviving civil partner – €3000

 

If your tax credits are higher or lower than what they should be, request a copy of your tax credit certificate from Revenue and this should spell out any adjustments that should be made. If you’re receiving items you’re not entitled to, contact Revenue to have this amended to avoid having a liability.

 

Paycheck Plus, Your Irish Payroll Processing Team

If you would like to speak to one of our resident payroll experts about bringing digital payslips to your organisation simply request a callback or call our Irish Payroll Providers on +353 (0) 1 905 9400

Our highly experienced payroll processing experts can help you to streamline your payroll processing and employee rewards. While our next-generation payroll software lets you consolidate your payroll processes into one simple and efficient workflow.