Boylan & Dodd Income Tax



So how do I work-out the tax I have to pay from the 6th April 2001?

The most important thing to remember about this tax year is that it is a "short tax year". We have factored the effect of the short tax year into the figures below in each case.

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.

Then follow these steps:-
Step One Calculate your taxable income as follows:-
  1. Calculate your total income for the period including salary and estimated overtime, BIK, rental income, deposit income etc.
  2. Deduct any tax-free allowances allowable at your top rate of tax.
  3. Deduct any relevant pension payments you make
  4. Deduct any qualifying medical expenses you have
  5. Deduct any permanent health insurance premiums you pay
Step Two Apply taxation to the income calculated in step one according to your situation as follows:

Single £14,800 @ 20%
Balance of Income @ 42%
Lone Parent £17,131 @ 20%
Balance of Income @ 42%
Married
(Two Incomes)		 £29,600 @ 20%
Balance of Income @ 42%

(Note: maximum of £21,460 transferable between the spouses).
Married
(One Income)		 £21,460 @ 20%
Balance of Income @ 42%
Step Three Calculate your Tax credits allowable given only at the standard (low) rate of tax. For many, (but not all) people, the credits will be the sum of the following:-

Credit Type Single Married
Personal Allowance £4,070 £8,140
PAYE Allowance £1,480 £1,480*
"Spouse Carer" allowance n/a £2,220**
* £1,480 for each spouse in PAYE employment
**For one income families where one spouse cares for dependents
Step Four Calculate your income tax "RELIEFS".

The main ones are:-
- Mortgage Interest Relief
- Medical Insurance
- Tuition Fees
- Rent Relief
- Waste Charges
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, for the purposes of this calculation.
Step Five Calculate your "tax credit" by multiplying the allowances from step three by the standard rate of tax, which is 20%.

Add this figure to any reliefs calculated in step four.

So for the single person (with no reliefs) in step three this will be £5,550 x 20% = £1,110.
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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!
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Step Seven Calculate your PRSI liability as follows (full rate contributors only):

Liable Income: £xx,xxx*
Deduct: £100 per person in PRSI Class A1 Employment by the number of weeks in insurable employment**
Liable to PRSI: £x,xxx
PRSI @ 4% £xxx

* Note: Income is subject to a ceiling of £20,905 per person. If your weekly income is less than £227 throughout the period, you are completely exempt from PRSI. If so, please skip step seven and move on to step eight.

Make sure to exclude your qualifying pension payments, BIK income and Permanent Health Insurance premiums from the income 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 £20,905 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 £280 per week throughout the period (per person in "A1" Employment) and multiplying the total liable income by 2%.
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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 39 to get your weekly net pay.