Employers are required to deduct any tax (PAYE) due from the taxable income of their employees. PAYE can be calculated on one of three bases, namely: cumulative, non-cumulative (period 1), emergency (further split between employees with and without a PPSN).
More detailed information on the PAYE system can also be found on Revenue’s website.
Calculating PAYE
The tax bases make use of an employee’s tax credits and standard rate cut-off points. The tax rate applicable is determined by an employee’s cut-off point, and their overall liability is reduced by their tax credits.
Revenue determines an employee’s cut-off points and tax credits based on their personal circumstances and reflects this information in the employee’s RPN. If an RPN for a new employee has not yet been received, PAYE for the employee should be calculated on the emergency basis.
Employees on the emergency basis receive the standard single person cut-offs, unless they do not provide their employer with a PPSN. If they do not provide a PPSN, they will be taxed on the emergency basis at the highest rate. Employees on the emergency basis do not receive any tax credits.
SimplePay calculates employees’ PAYE on the applicable basis depending on the tax information captured on the system. It is, therefore, important to ensure that your employees are correctly set up with all of the relevant information (PPSN, tax information and take-on balances) entered as soon as possible. More information on doing so can be found in the following sections:
Reporting PAYE
Employers must report and pay over their PAYE liability each pay period as part of their electronic submissions to Revenue. These submissions must be done for each pay period on or before the date on which employees receive payment. More information on the submission process can be found in this article: