how to calculate my actual PAYE

mox54

I'm not going to whinge about how much tax i'm paying and levy and all the other stuff, I can work out my PRSI and the levys but simply cant see how they arrive at my actual PAYE amount on my payslip, my taxable pay mins tax credit gives me say 194.00 which I can also see is over at the employee TY figure however the employee TP figure for PAYE has me stumped, how do they arrive at this figure, to mr it seems very high but is that just the way it is, how do they work out the PAYE employee TP figure>

Thanks in advance.
:eek:

barneystinson

mox54 wrote: »

I'm not going to whinge about how much tax i'm paying and levy and all the other stuff, I can work out my PRSI and the levys but simply cant see how they arrive at my actual PAYE amount on my payslip, my taxable pay mins tax credit gives me say 194.00 which I can also see is over at the employee TY figure however the employee TP figure for PAYE has me stumped, how do they arrive at this figure, to mr it seems very high but is that just the way it is, how do they work out the PAYE employee TP figure>

Thanks in advance.
:eek:

OK, you kinda lost me in the middle of that post, but I'm gonna try answer your question..!

If you are taxed on a "cumulative" basis, which is the norm, it works as follows:

1. The first relevant figure is total taxable pay for the year to date (i.e. this increases from last weeks figure by the amount of your taxable pay in the current week).

2. This figure is compared to the standard rate cut-off point for the year-to-date (for a single person this is roughly €630 per week - ie in week 1 you pay high rate tax on earnings over €630, and in week 26 you only pay high rate tax on the surplus of your total earnings for the year in excess of €16,380).

3. If the total taxable pay (TY) is less than the standard rate cut-off (TY), then all income is taxable at the standard rate (20%). If the taxable pay is higher, then the excess is taxable at 41%.

4. The notional tax is then calculated i.e. X @ 20%, plus Y @ 41%, giving a total notional amount of tax on the income for the year-to-date.

5. The tax credit for the year-to-date (Tax Credit TY) is deducted from this notional tax amount, to give you PAYE for the year-to-date - "PAYE TY"

6. Deduct from this the amount of tax that was paid up to the end of the last week, and you have the amount of tax due to be paid this week i.e. "PAYE - TP"

Clear as mud?!

(Oh, just an afterthought, but it's possible that you've been taxed more this month because your employers continued to use your 2010 tax credits while they were waiting to get the details from Revenue of your 2011 tax credits - this would be quite common. But tax credits have been cut by ~10%, so this would result in an adjustment in the payroll run where your new lower tax credits are brought into the equation...)

mox54

Thanks very much for the very detailed response, much appreciated.:D