Tax Credits and Emergency Tax

What are Tax Credits?

Under the tax credit system every individual is entitled to tax credits depending on personal circumstances. Every individual can claim a personal tax credit. PAYE taxpayers can also claim a PAYE tax credit.

For details of the main credits see information leaflet Leaflet IT 1 (Tax Credits, Reliefs and Rates)

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What must I do to get my Certificate of Tax Credits and Standard Rate Cut-Off Point?

When you start work for the first time, complete pdfForm 12A (PDF, 211KB) (Application for a Certificate of Tax Credits and Standard Rate Cut-Off Point), send it to your tax office and you will receive a Certificate of Tax Credits and Standard Rate Cut-Off Point.

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How do I get the benefit of my Tax Free Credits?

Your tax credits are given to you for a full tax year. So, whether you start work in the first week of the tax year or six months into the tax year, you still qualify for a full year's tax credits. As tax deductions are spread evenly throughout the year under the PAYE system, the total due is divided into 52 weekly/12 monthly amounts, depending on frequency of pay. Your employer grants these credits against your gross tax to arrive at your tax payable.

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What happens if I don't follow the procedures above?

If an employer does not get either a:

  • Certificate of Tax Credits and Standard Rate Cut-Off Point or
  • Form P45 (parts 2 and 3) from an employee

he/she is obliged to deduct tax on the emergency basis when paying an employee's wages or salary. Under the emergency basis, a temporary tax credit is given for the first month of employment but tax deductions are increased progressively from the second month on.

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