A Guide to PAYE for Employees
- What is PAYE
- Important PAYE documents
- Tax credits
- Tax Credit Certificate
- Universal Social Charge (USC)
- PAYE Anytime
- Changing jobs
- PAYE Anytime using Mobile Devices
As an employee your tax is taken from your pay by your employer.
This is known as PAYE or Pay As You Earn.
PAYE ensures that the yearly amount of tax that you have to pay is collected evenly throughout the year on each payday.
How does your employer know how much tax to collect?
At the start of each year, Revenue sends your employer a notice that gives the necessary details needed to work out your correct tax. This notice includes any changes to tax that were made in the most recent Budget.
The details in the notice are based on the information about your personal circumstances that you gave to Revenue. When there is a change in your personal circumstances that affects the tax you pay, you need to tell Revenue. Revenue will then send your employer a new notice to calculate the new amount of tax you should be paying. A separate more detailed notice is sent to you.
How does Revenue look after your personal information?
We give your employer only the information needed to calculate the tax you pay. All other personal information you give Revenue remains confidential between you and Revenue.
Tax Credit Certificate
The certificate that shows your tax credits and rate band. This certificate is made available through numerous channels, by
The certificate that your employer gives to you at the end of the year. It shows your pay, and the tax, USC, LPT and PRSI deducted by your employer during the year.
The form that your employer gives to you when you leave your job. It shows what you were paid and the tax USC, LPT and PRSI for the year up to your date of leaving.
What are tax credits?
Tax credits are credits that you get based on your personal circumstances, e.g. single person or married or in a civil partnership, and which are set against your income for the year. A tax credit reduces the tax you pay on your income. Some credits are fixed amounts, like the single or married person's credit; others depend on the amount you spend, like tuition fees.
A full list of all tax credits is available in leaflet: IT1 - Tax Credits Reliefs & Rates
How do they work?
Under PAYE your tax credits are spread across the number of paydays you have in the year. This reduces the tax you pay every payday.
Tax credits reduce your tax
Mary is paid a weekly amount of €600 Taxable at 20% €120 Less weekly tax credits €70 Tax to be paid this week €50
Tax credits mean more money in your pocket!
Whether or not you work every week or month in the year, you will still be entitled to your full year's tax credits. For example, if you didn't start work until July, the tax credits you didn't use for the first half of the year will be carried forward and used on each following payday until the year ends.
What tax credits do I already have?
You can see what tax credits you already have by checking your tax credit certificate.
How do I claim tax credits?
If your personal circumstances entitle you to claim a tax credit, the easiest and fastest way to claim is to use PAYE Anytime which can be accessed through myAccount, or alternatively contact your Revenue office.
Do I have to claim my tax credits every year?
In most cases, when you claim a tax credit Revenue automatically gives it every year. It will be shown on your tax credit certificate. However, if you are no longer eligible to claim the tax credit it is important that you contact Revenue.
Is there a time limit on claiming tax credits?
There is a four-year time limit for claiming tax credits. It is important that you claim in time or you could lose out.
The most common tax credits
- Single or Married or in a Civil Partnership
- Single, Widowed or a Surviving Civil Partner qualifying for One Parent Family Tax Credit
- Home Carer
- Incapacitated Child
- Dependent Relative
- Work-related expenses
- Age tax credit for 65 and over
- Rent paid to a private landlord
- Tuition fees
If you are aged 65 or over you might not have to pay tax on your deposit interest (interest you earn on your savings). Ask your bank, building society or credit union for more information.
Tax relief on mortgage payments and medical insurance
The tax relief for paying home mortgage interest is given directly to you by the bank or building society you borrow from. You do not have to claim this tax relief from Revenue and it does not appear on your tax credit certificate. Check with your bank or building society to make sure you are getting what you are due. The same arrangements are in place for medical insurance payments.
Did you pay any medical expenses during the year?
You may be due a tax refund!
If you paid medical or non-routine dental expenses during the year, and you have paid tax in that year, you can claim a tax refund.
To claim the refund:
- The quickest and easiest way to claim Health Expenses is online using PAYE Anytime, which is available on our online service myAccount or
- fill in a Form MED 1 - Health Expenses Claim for Tax Relief (PDF, 1.12MB) and send it to your Revenue office.
The form Med 1 is also available from any Revenue office.
Your tax credit certificate shows the tax credits you are currently claiming and your rate band.
How is your tax calculated?
Here is an example of how the tax of a single person who is paid weekly is calculated:
Gross pay €675 per week Rate Band €630.77 weekly Tax Calculation Rate Band 630.77 taxed @ 20% = 126.15 Balance of pay 44.22 taxed @ 41% = 18.13 Gross Tax figure 144.28 Less weekly Tax Credits -63.47 Tax you pay now reduced to 80.81
This example is for a person who is paid weekly. If you are paid fortnightly or monthly the same principles will apply.
If there is a change in your personal circumstances that affects the tax you pay, you need to tell Revenue. This could happen, for example, if you started work in a job where you can claim work-related expenses for a uniform. Revenue will then send you a new tax credit certificate that includes the changes. Revenue will give your employer the details needed to deduct the correct tax from your pay.
You can get your tax credit certificate by:
The USC is a tax payable on gross income, including benefits from your employer, but before deducting your pension contributions. Your employer will deduct the USC from your earnings on a pay period by pay period basis.
Who is exempt from paying the USC?
Individuals whose annual income does not exceed €12,012.
Employers will deduct the USC from payments they make to their employees on a pay period by pay period basis.
Full information on the Universal Social Charge (USC).
PAYE Anytime, which can be accessed through myAccount is Revenue’s online service for employees. This interactive facility offers individuals who pay taxes under (PAYE system, a quick, secure and convenient method to manage their taxes online.
With PAYE Anytime you can avail of a full suite of services including viewing information held on your Revenue record. You can claim Tax Credits, declare additional income, submit an annual tax return (Form 12) and update your personal information.
To use PAYE Anytime you must be registered for myAccount. PAYE Anytime users can access myAccount using their PAYE Anytime PIN. If you have forgotten your PAYE Anytime PIN you can click on the "Forgot Password?" link on the sign in screen in myAccount and you can obtain a new password. It will be possible to get a new password immediately in many cases. In PAYE Anytime you can:
- View your tax record
- Claim a wide range of tax credits
- Apply for refunds of tax including health expenses
- Declare additional income
- Request a review of your income tax liability for previous years
- Re-allocate credits between yourself and your spouse or civil partner
- Track your correspondence submitted to Revenue
- Manage your own tax affairs in a quick, easy, free and secure manner
- Immediate update of your tax credits
- Speedy refunds
- Secure access 24 x 7 x 365
- Environmentally friendly
A small number of taxpayers cannot claim a review using PAYE Anytime such as:
- Individuals selected by Revenue to complete an Income Tax Return (eForm 12)
- Individuals who are registered for Income Tax and also have income that is taxable under PAYE
Further Information on PAYE Anytime
Remember your P45
When you leave a job, your employer gives you a form P45. This shows your pay, tax, USC, LPT and PRSI for the year up to the day you leave. Your new employer needs this form to deduct the correct amount of tax.
If you do not give your new employer a P45, you may end up paying too much tax and USC .
Your new employer will arrange to get a new tax credit certificate for you so that the correct tax continues to be deducted from your pay.
What if I am out of work for a while?
If you are out of work and have paid tax during the year, you may be entitled to claim a tax refund.
When do I apply for a tax refund?
If you are unemployed, wait at least 4 weeks from the date you became unemployed.
If you have another taxable source of income, such as Jobseeker's or Illness Benefit from the Department of Social Protection, wait at least 8 weeks from the date you became unemployed.
If you paid emergency tax, you can apply immediately for a tax refund.
How do I apply for a tax refund?
A full list of all tax credits is available in leaflet: IT1 - Tax Credits Reliefs & Rates.
This leaflet is intended to describe the subject in general terms. As such, it does not attempt to cover every issue which may arise in relation to the subject. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published herein.