John is a PAYE employee. He is single, and these are his tax credits and rate band for 2020:
Tax credits and rate bands
|
Value |
Single Person’s Tax Credit |
€1,650
|
PAYE Tax Credit |
€1,650
|
Total tax credits |
€3,300 per year (€63.47 per week)
|
Rate band |
€35,300 per year (€678.85 per week)
|
John was given a tax credit certificate showing these tax credits and rate band and showing that Week 1 Basis applies. His employer was given a Revenue Payroll Notification (RPN) with the total amounts.
John earns €600 per week. This is how his weekly tax is calculated:
John's weekly tax calculation for pay day 17 January 2020
|
Income | Tax | Explanation |
Taxed at 20% |
€600 |
€120.00 |
Apply the standard rate of 20% up to the limit of the rate band
(€678.85) on the RPN
|
Taxed at 40% |
0 |
0 |
As John’s income (€600) is less than his rate band (€678.85), he does not pay tax at the higher rate of 40% this week |
Gross tax |
|
€120.00 |
Add the amount of tax at the standard rate to the amount of tax at the higher rate (if any) |
Less tax credits |
|
(€63.47) |
Take away the tax credits as shown on the Tax Credit Certificate |
Tax payable |
|
€56.53 |
Gross tax less tax credits. |
John's weekly tax calculation for pay day 24 January 2020
|
Income | Tax | Explanation |
Taxed at 20% |
€600 |
€120.00 |
Apply the standard rate of 20% up to the limit of the rate band (€678.85) on the RPN |
Taxed at 40% |
0 |
0 |
As John’s income (€600) is less than his rate band (€678.85), he does not pay tax at the higher rate of 40% this week |
Gross tax |
|
€120.00 |
Add the amount of tax at the standard rate to the amount of tax at the higher rate (if any) |
Less tax credits |
|
(€63.47) |
Take away the tax credits as shown on the Tax Credit Certificate |
Tax payable |
|
€56.53 |
Gross tax less tax credits. |