Starting Work and Tax
- Basic information
- What do I need to do?
- What happens next?
- When do I start to pay income tax?
- What do I pay tax on?
I am about to start working for the first time and I want to know what I must do to sort out my tax
First of all, welcome to the tax system.
Revenue will try to make it as easy as possible for you to understand your entitlements and obligations. The following Questions and Answers are designed to give you enough information to get your tax sorted out in time for your first pay cheque.
If having read the following material you still have some questions you would like answered, please don’t hesitate to telephone or call to any Revenue office. A full list of our office addresses and telephone numbers is shown in the green pages section of your telephone directory and on our Contact Details section.
Your new employer must deduct tax from your pay under the PAYE system. To make sure that your tax is properly dealt with from the start and that your employer deducts the right amount of tax from your pay you should do two things:
- Give your employer your PPS No. (Personal and Public Service Number), formerly your RSI No. He/she will then let the tax office know that you have started work.
- Apply for a certificate of tax credits by completing Form 12A (PDF, 211KB) - (Application for a Certificate of Tax Credits and Standard Rate Cut-Off Point) and sending it to the tax office. Ask your employer for a form 12A. Your employer will tell you to which tax office the completed form 12A should be sent.If your employer does not have a form 12A, you can get one from any tax office or telephone 1890 30 67 06.
Ideally, you should do all this as soon as you accept an offer of a job - even if it is only part-time or holiday employment. This will give your employer and the tax office time to get things sorted out before your first pay-day.
Your tax office will send you a Certificate of Tax Credits and Standard Rate Cut-Off Point, which sets out in detail the amount of tax credits due to you. The tax office will also send a Certificate of Tax Credits and Standard Rate Cut-Off Point to your employer which shows the total amount of your tax credits.
You will normally start to pay tax from your first pay-day. The amount of tax you pay depends on your level of pay and the amount of your tax credits. If your pay on any pay-day is less than your tax-free allowances then you don’t pay tax on that pay-day. If your pay is more than your tax-free allowances you pay tax on the difference.
If you start work in the first week/month of the tax year your employer will deduct one week’s/month’s fraction of your annual tax-free allowances from your first week’s/month’s pay and will deduct tax from the balance.
If you start work in (say) the 27th week of the tax year your employer will calculate your gross tax on your wages, but you will have 27 weeks tax credits to offset against this liability, this will continue till you utilise all your unused tax credits.
You pay tax on earnings of all kinds arising from your employment including bonuses, overtime, non-cash pay - known as benefit-in-kind e.g. use of company car, tips, Christmas boxes etc.
You do not pay tax on:
Interest from Savings Certificates, Savings Bonds and National Instalment Savings Schemes with An Post.
Payments to approved pension schemes.