Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all,
Vanilla are planning an update to the site on April 24th (next Wednesday). It is a major PHP8 update which is expected to boost performance across the site. The site will be down from 7pm and it is expected to take about an hour to complete. We appreciate your patience during the update.
Thanks all.

Income Tax - Clarification

Options
  • 17-09-2020 2:25pm
    #1
    GlobalSun
    Registered Users Posts: 245 ✭✭


    Hi all,

    I am requesting your kind help as I believe something isn't right with the taxes applied to my new job.

    To give you a bit of background:

    I recently changed jobs. My previous job paid €40K (yearly) whereas my current job is at €48K (yearly). I therefore would expect a slight increase on my monthly income.
    Prior to accepting the role, I had used a few simulators to assess the tax & net income for the new job (forecast at circa. €35.5K or €2.9K monthly).

    Today, I had the great displeasure of looking at my reported payment for September and something isn't sitting right. I'm actually earning less than I did in my previous job when the tax basis is Cumulative for both. As a matter of fact, my income tax doubled when I made the switch from Week 1 in August to Cumulative in September.

    In any case, it doesn't make sense that I am earning less from a net income perspective when I'm making more gross-wise. Sure, income taxes are higher, but not to this extent.

    To give you some numerical facts:
    Previous job at €40K (cumulative tax basis) - Generic salary with no overtime or bonus
    Gross Pay: €3,333
    Pay for for income tax: €3,300
    Income tax: €439
    USC: €92.31
    PSRI: €133.3
    Net monthly income: €2,636 - Result of the above (& matches my monthly income)

    Current job at €48K (cumulative tax basis) - Generic salary with no overtime or bonus
    Gross Pay: 4,136
    Pay for income tax: €4,096
    Income tax: €1,347
    USC: 6.73
    PSRI: 165.46
    Net monthly income: 2,576 - Result of the above

    If we take into account:
    Cut-off: €35,300

    Therefore:
    €35,300*20%= €7,060
    €12,700*40%= €5,080

    Tax credits: €3,300

    = 12,140-3,300= 8,840 + USC
    = Yearly net salary of circa. €36K - monthly around €2.9K.

    Sure enough, an €8K salary increase does not trigger a €1K monthly income tax increase.

    I don't owe anything to the revenue either as income tax is obviously paid through PAYE. I really do think something isn't right with this. I've changed jobs before and had a €12K increase last year when I moved to the €40K job and it didn't negatively impact my income.

    Can anyone advise?

    Thank you.


Comments

  • Options
    #2
    namenotavailablE
    Registered Users Posts: 59,551 ✭✭✭✭namenotavailablE


    Your overall net figures for the first job pretty much tally with my calculator's results. However, it isn't clear why the gross v pay for tax purposes should differ in your calculations. Were you receiving some sort of €33 expense allowance included in the €3333 monthly amount? Your 'old tax value' of €439 seems a bit lower than expected for an income of €3333 per month (I make it €470 per month for the old job). Both PRSI and USC for the old job seem spot on.

    The new job (annual salary is greater than €48000 based on the figures you're using) seems way off- the tax seems high; the USC is very, very low; the PRSI is correct. My calculations for 'old v new' show the following (and I'm ignoring the discrepancy between gross and 'pay for tax' purposes):

    nPlksrA.png

    Your best avenue is to approach the payroll section or whoever calculated the pay and ask for more information about how the values were computed.

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



  • Options
    #3
    GlobalSun
    Registered Users Posts: 245 ✭✭GlobalSun


    Wow, thanks a lot for this! Appreciate you taking the time to look into this. It definitely clarifies the situation!


Advertisement