Methods of calculating tax
Tax exemption and marginal relief
Note
The information on this page refers to current employer obligations. For employer obligations before 1 January 2019, please see the Employers Guide to PAYE.
Some employees are entitled to tax exemption each year. Similarly, some employees are exempt from Universal Social Charge (USC).
An employer should only apply a tax exemption if they are instructed to do so on the employee’s Revenue Payroll Notification (RPN).
Where tax exemption applies, it is not an instruction that income tax is not to be deducted (unlike USC). Instead, the employee is given a special amount cut-off point and tax credit on their RPN. The higher rate of tax to be applied is the marginal relief rate of 40%.