Calculating weekly/monthly tax

What is the Certificate of Tax Credits and Standard Rate Cut-Off Point which Revenue sends me each year?

Revenue issues a Certificate of Tax Credits and Standard Rate Cut-Off Point to every employee who makes a claim for tax credits. The certificate sets out in detail the amount of tax credits and standard rate cut-off point that Revenue has determined to be due to the employee.

In addition to issuing an employee certificate to each employee, Revenue also issues a notification to the employer. No information regarding the personal circumstances of the employee is disclosed on the employer's notification. It shows only the total amount of the tax credits and standard rate cut-off point to which the employee is entitled together with the equivalent weekly and monthly figures.

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What are Tax Credits?

Under the tax credit system an employee is entitled to tax credits depending on personal circumstances e.g. married person's tax credit, employee (PAYE) credit, Trade Union Subscriptions tax credit, etc. (see what tax credits you are entitled to claim).

How can I claim these tax credits?

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What is my Standard Rate Cut-off Point?

Your standard rate cut-off point is the amount of your personal standard rate tax band 20%. For each pay period, weekly, fortnightly or monthly, you pay tax at the standard rate of tax up to your standard rate cut-off point. Any income over your standard rate cut-off point is taxed at the higher rate 41%.

Example:

Ann has a weekly standard rate cut-off point of €680.77 and she earns €750 per week. This means that the first €680.77 of Ann's wages is taxed at 20% and the balance €69.23 (€750 - €680.77) is taxed at the higher rate 41%.

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How do I calculate my weekly tax figure?

Your weekly tax figure is calculated as follows (if you are paid fortnightly or monthly the same principles will apply):

  1. Tax is calculated at the standard rate of 20% on your gross pay up to the amount of your weekly standard rate cut-off point
  2. Any balance of gross pay above the standard rate cut-off point is taxed at the higher tax rate of 41%
  3. The tax calculated at 20% is added to the tax calculated at 41% to arrive at your gross tax figure
  4. The gross tax figure is then reduced by the amount of your tax credits to arrive at your tax payable in that week

The following examples will illustrate how to calculate your tax liability.

Remember, these are only examples of Tax Credits and standard rate cut-off points. Your own personal amounts are printed on your most up-to-date Tax Credit Certificate.

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Examples

Note: The Income Levy is not included in the following examples.

Example 1

John is a PAYE employee. He is single and is entitled to the following tax credits and standard rate cut-off point in 2010:

John's tax credits
Tax Credits
Single Person's Tax Credit 1,830
Employee (PAYE) Tax Credit 1,830
Trade Union Subscriptions 70
Per year 3,730 per year (71.73 per week)
Standard Rate Cut-Off Point 36,400 per year (700.00 per week)

A Tax Credit Certificate showing these tax credits and standard rate cut-off point, issued to John. His employer received notification of the total amounts.

John earns €300 per week. His weekly figure of tax is calculated as follows:

John's weekly figure of tax
Step Taxable Pay €300
1 Tax @ 20% €300 €60.00 Apply standard rate 20% up to a maximum of the standard rate cut-off point (€700.00) as advised by Revenue in the tax credit certificate
2 Tax @ 41% Nil Nil As John's weekly earnings (€300) are below his weekly standard rate cut-off point (€700.00), he will not pay tax at the higher rate of 41% this week
3 Gross Tax €60.00 Add the figure of tax due at standard rate to the figure of tax due at the higher rate (if any)
4 Less Tax Credit (€71.73) Tax credit advised by Revenue in the Tax Credit Certificate
Net tax payable by John this week Nil Gross tax less tax credits. As John's weekly tax credits (€71.73) exceed his weekly gross tax (€60.00), he is not due to pay tax this week.

Example 2

David is a PAYE employee. He is married and his wife is not employed outside the home. He is entitled to the following tax credits and standard rate cut-off point in 2010:

David's tax credits
Tax Credits
Married Person's Tax Credit 3,660
Employee (PAYE) Tax Credit 1,830
Home Carer tax Credit 900
Service Charges 80
Trade Union Subscriptions 70
Per year 6,540 per year (125.77 per week)
Standard Rate Cut-Off Point 45,400 per year (873.08 per week)

A Tax Credit Certificate showing these tax credits and standard rate cut-off point, issued to David. His employer received notification of the total amounts.

David earns €750 per week. His weekly figure of tax is calculated as follows:

David's weekly tax
Step Taxable Pay €750
1 Tax @ 20% €750 €150.00 Apply standard rate 20% up to a maximum of the standard rate cut-off point (€873.08) as advised by Revenue in the tax credit certificate
2 Tax @ 41% Nil Nil As David's weekly earnings (€750) are below his weekly standard rate cut-off point (€873.08), he will not pay tax at the higher rate of 41% this week
3 Gross Tax €150.00 Add the figure of tax due at standard rate to the figure of tax due at the higher rate (if any)
4 Less Tax Credit (€125.77) Tax credit advised by Revenue in the Tax Credit Certificate
Net tax payable by David this week €24.23 Gross tax less tax credits.

Example 3

Mary is a PAYE employee. She is single and is entitled to the following tax credits and standard rate cut-off point in 2010:

Mary's tax credits
Tax Credits
Single Person's Tax Credit 1,830
Employee (PAYE) Tax Credit 1,830
Flat Rate Expenses 95
Service Charges 80
Dependent Relative Tax Credit 80
Trade Union Subscriptions 70
Per year 3,985 per year (76.64 per week)
Standard Rate Cut-Off Point 36,400 per year (700.00 per week)

A Tax Credit Certificate showing these tax credits and standard rate cut-off point, issued to Mary. Her employer received notification of the total amounts.

Mary earns €1,200 per week. Her weekly figure of tax is calculated as follows:

Mary's weekly tax
Step Taxable Pay €1,200
1 Tax @ 20% €700.00 €140.00 Apply standard rate 20% up to a maximum of the standard rate cut-off point (€700.00) as advised by Revenue in the tax credit certificate
2 Tax @ 41% €500.00 €205.00 Apply higher rate on pay in excess of the standard rate cut-off point (€1,200- €700.00)
3 Gross Tax €345.00 Add the figure of tax due at standard rate to the figure of tax due at the higher rate.
4 Less Tax Credit (€76.64) Tax credit advised by Revenue in the Tax Credit Certificate
Net tax payable by Mary this week €268.36 Gross tax less tax credits.

wordYou can use this worksheet to calculate your tax payable (MSWord, 32KB)

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