What pay includes

Benefits, advanced payments and sick pay

Non-cash payments

An employer can give non-cash benefits to an employee. These are referred to as benefits in kind. The value of these benefits is added to the employee's pay for tax purposes.

Employees' deductions paid by their employer

If the employer pays an employee's portion of Pay Related Social Insurance (PRSI), this must be counted as additional pay. The employer must deduct Income Tax, PRSI and USC on this additional payment.

Paying employee tax on a benefit

When paying an employee, the employer should always calculate what tax, if any, is due. If the employer provides a benefit 'free of tax', they may pay the tax due on behalf of the employee. The tax due is based on the value of the benefit to the employee. For further details on how to calculate the tax on this type of payment please see Payment of employee tax by the employer.

Payments in advance or on account

The employer can choose to pay an employee or a director in advance or on account. This includes pay credited to a bank account. This payment is taxed as normal pay in the week or month that it is paid.

Payments when an employee is absent due to illness

The employer can pay an employee while they are absent from work due to illness. The employer must deduct Income Tax, PRSI and USC on these payments.

The employee may receive Illness Benefit (IB), Partial Capacity Benefit or Occupational Injury Benefit. Revenue will collect any tax due on these payments by reducing the employee's tax credits and issuing an updated Revenue Payroll Notification (RPN). These social welfare payments should not be taxed through the employee's wages. Further information on these payments is available in Taxation of social welfare benefits.

Next: Expenses and travel