Understanding Your Payslip - Confused by all those terms on your PAYE payslip? Don’t worry because when it comes to understanding your payslip you are not alone!
HOW TO READ YOUR PAYSLIP
- PPS Number
Your Personal Public Service (PPS) number is a unique identifier used by certain state bodies for tax purposes and when you need to access social welfare benefits and public services and information in Ireland.
- PRSI Class
The PRSI Class is usually dictated by a person’s employment and will influence the amount of PRSI contributions you pay. There are 11 different classes, here’s more info on classes and contributions.
- Weekly/monthly cut off
The amount you can earn each time you’re paid before you have to pay the higher rate of tax. Every time you’re paid, you pay tax at the standard rate of tax up to your standard rate cut-off point.
- PAYE
This stands for ‘Pay As You Earn’ and is a system of deducting income tax, PRSI and USC from your salary.
- Tax Credit
Each individual is entitled to tax credits, based on their personal circumstances, e.g. if they’re married or in a civil partnership or are an employee (PAYE) or have certain tax credits, etc. Tax credits are allocated each year and tax is calculated as a percentage of your income. Your tax credits are deducted from this to give the amount of tax you’ll pay.
Any unused credits are forwarded to your next pay period(s), so a tax credit will reduce your tax by the amount of the credit.
- PRSI
PRSI is ‘Pay Related Social Insurance’ contributions which go towards Social Welfare benefits and pensions. Most people working in Ireland have to pay this with few exceptions.
The amount you pay depends on your job, earnings, and what PRSI class you’re in. In some cases, you may be entitled to a rebate.
- USC
USC or the ‘Universal Social Charge’, is a tax that has replaced the income levy and health levy. You’ll pay this if your gross income is more than €12,012 per year.
- Gross Pay
The total amount you’re paid before any deductions are made.
- Net Pay
The total amount each time you’re paid after tax, PRSI, and other deductions.
- Total Deds
The total amount of money deducted in that pay period.
Sample payslip
Your Payslip explained
Your employer applies PAYE tax based on information from Revenue on your employee tax credit certificate. However, Revenue might not have the most up-to-date information on your personal status (marital status or dependants etc) which could result in the incorrect allocation of bands and credits. This means you may end up paying more tax than you need to.
If this is the case, you should make a claim at the end of the year as Revenue won’t know you’re entitled to additional relief if you don’t inform them of a change in your circumstances.
Year-end Underpayments
This can happen if you’ve been allocated tax credits you are not entitled to. Revenue will usually seek reimbursement over the course of the following year by making an adjustment to your tax credits.
What does that mean for you?
This means your take-home pay will be reduced until the underpayment is settled. Sometimes underpayments go unnoticed by Revenue for a number of years and the taxpayer is then faced with a much bigger underpayment.
What can you do?
When you get your next payslip, see what it says for your monthly / weekly tax credit and cut off point. Multiply this by 12 or 52 to determine your annual tax credit and cut-off point.
The most common tax credits / cut-off points for 2015 are
Single person or married person both spouses working:
Credit: €3,300 Cut off: €33,800
Married person one spouse working (no dependents):
Credit: €4,950 Cut off: €42,800
Married person one spouse working (with at least one child):
Credit: €5,760 Cut off: €42,800
If your tax credits are higher or lower than what they should be, request a copy of your tax credit certificate from Revenue and this should spell out any adjustments that should be made. If you’re receiving items you’re not entitled to, contact Revenue to have this amended to avoid having a liability. Click here to read full article
For further information and assistance on processing payroll for employees, speak to Niamh on +353 (0)41 686 3000 or Request a callback from our Payroll Team today.
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