Income Tax

For the sake of simplicity, we have omitted some reliefs from this section. If you are entitled to reliefs as arise in the Tax Breaks section or any other reliefs, then please factor them in to your calculations. Single-Parents and anybody claiming the blind, age, incapacitated child (and/or carer) or dependent relative allowance, please read the additional notes here. Then follow these steps:-
Step One	Calculate your taxable income as follows:- Calculate your total income for the year including salary and estimated overtime, BIK, rental income, deposit income etc. Deduct any tax-free allowances allowable at your top rate of tax. Deduct any relevant pension payments you make Deduct any qualifying medical expenses you have If you are aged 55+, deduct any qualifying rent you pay Deduct any permanent health insurance premiums you pay
Step Two	Apply taxation to the income calculated in step one as follows: Single Married £14,000 @ 24% Balance of Income @ 46% £28,000 @ 24% Balance of Income @ 46%
Step Three	Calculate your Personal Allowances given only at the standard (low) rate of tax. For many,(but not all) people, the allowances will be the sum of the following:- Single Married Personal All: £4,200 PAYE All: £1,000 Personal All: £8,400 PAYE All: £1,000* * per person in "PAYE" employment That is, for a single person, total allowances = £5,200.
Step Four	Calculate your income tax "RELIEFS". The main ones are:- - Mortgage Interest Relief - Medical Insurance - Tuition Fees - Rent Relief - if you are aged under 55. Click on a relief to find out more details. Make sure to calculate the actual tax effect as opposed to the amount you pay for these reliefs.
Step Five	Calculate your "tax credit" by multiplying the allowances from step three by the standard rate of tax, which is 24%. Add this figure to any reliefs calculated in step four. So for the single person in step three with no reliefs, this will be £5,200 x 24% = £1,248. -
Step Six	Calculate your PAYE liability by taking the total tax due (Step Two) and subtracting your tax credit (Step Five). We're nearly there! Next, it's PRSI! -
Step Seven	Calculate your PRSI liability as follows (full rate contributors only) : Liable Income: £xx,xxx* (from step one) Deduct: £100 per person in PRSI Class A1 Employment by the number of weeks in insurable employment** Liable to PRSI: £x,xxx PRSI @ 4.5% £xxx * Note: Income is subject to a ceiling of £25,400 per person. Make sure to exclude your qualifying pension payments and BIK income from the figure liable to PRSI. **Once your salary passes the ceiling, you no longer get the £100 allowance per week and you cease to pay PRSI. So for the sake of example, if you earned £25,400 in week one, your annual exemption would only be £100.
Step Eight	Now (finally), calculate your health levy contribution by taking your total liable income where this is over £217 per week (per person in "A1" Employment) and multiplying the total liable income by 2%. -
Step Nine	We are now ready to put all the pieces together as follows: Taxable Income Step One Less: PAYE Step Six Less: PRSI Step Seven Less: Health Levy Step Eight   = Net Annual Income You can then divide by 52 to get your weekly or 12 to get your monthly net pay.

• The single-parent allowance for 1999/2000 is £8,400. The £8,400 allowance is split as follows:

  • £5,250 is allowed as a tax credit
  • £3,150 is allowed against the top rate

For one-parent families, make the following adjustments to steps one to nine to calculate your liability:-
1. At step one, deduct £3,150 from your total income.
2. When calculating your personal allowances (step three) make sure to only include £5,250 as your main personal allowance added to any other allowances you may be entitled to.
3. Complete all other steps as above.
   
   
• Other Allowances - Blind, Age, Incapacitated child/carer and Dependent Relative allowance
  
  These allowances are still given against the top rate of tax. You should therefore deduct them from your income in step one above and then proceed with the rest of the steps.