# How much tax will I pay on my earnings



## junii (11 Jun 2007)

Hi,
I have started a new job in which I will be earning 25k per annum.
I want to start doing up my budget and I am wondering how much tax I should expect to pay each month or week. Surely it can't be on a percentage basis as I have heard before of people getting varying amounts of tax taken off them.

This is my first real job, what other things do I need to know.


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## ClubMan (11 Jun 2007)

Have you tried [broken link removed] to get an idea of what your deductions and net take home pay will be? Make sure to get your statement of tax credits ASAP and avoid emergency tax if at all possible. Make sure that you claim all tax credits/allowances available to you - see the Taxation forum key posts. Make sure to check and understand your payslips and not to expect your employer and _Revenue _to get it right automatically. Mistakes do happen! Also check your _P60 _each year and ask _Revenue _for a _P21 _balancing statement especially if you think that you may have over or under paid tax.


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## junii (11 Jun 2007)

INCOME FROM EMPLOYMENTS €:
  Income for Self                25000.0
  Other Incomes/Benefits         0.0
                                                                          --------
  Gross Statutory Income         25000.0


  CREDITS (@20%)€:
  Personal Allowance                              8800.0
  PAYE Allowance                                             8800.0
  Medical Insurance Allowance   0.0
  Service Charge Allowance                    0.0
                                                                          --------
  Total Credits (@20%)              17600.0


  ALLOWANCES (@41%) €:
  Med Expenses, Perm Health     0.0
  Expenses                                                          0.0
                                                                          --------
  Total Allowances                                  0.0

  COMPUTATION OF NET TAX PAYABLE BY YOU €:
  Gross Statutory Income         25000.0
   Less Allowances before tax    0.0
                                                                          --------
  Taxable Income                 25000.0
     Which is chargeable as follows:
           25000.0 @ 20% =                      5000.0
           0.0 @ 41% =                  0.0
                                                                          --------
  Income Tax due                                                5000.0
   LESS €:
    Tax Credits (17600.0 @20%)            3520.0
  Total Income Tax due               1480.0
  Net Tax deducted under PAYE            0.0
                                                                          --------
  Tax Underpaid                                     € 1480.0






These are my results. I do not fully understand this. I'll have a look through those key posts which seem quite complex in the next few days. 




In the meantime would you mind helping me to digest the results of that calculator... So do I only have to pay 1480 per annum tax? That sounds very reasonable. €30 quid a week.


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## ClubMan (11 Jun 2007)

You need to refer to [broken link removed] to understand the figures. But basically a single person pays 20% tax on any earnings up to €32K p.a. and 41% on the remainder. Since you will earn €25K you pay 20% tax on the lot. Then you deduct your tax credits from this to get your net tax figure which is actually what you pay. The calculator assumes a certain number of standard/common tax credits but you may be entitled to more.  In your case the calculator estimates that your net tax bill will be €1,480.

Your _PRSI_/health levy deductions are a bit more complicated but the calculator should be at least a good estimation of what you will pay (if not the exact figure). If you are on _PRSI Class A_ then you will pay €1,236 p.a. in _PRSI_/health levy in addition to the tax figure above. However on €25K p.a. you may actually be on a different _PRSI _class - I'm not sure. See here for more.


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## Blinder (11 Jun 2007)

The 1480 is the tax you wll pay this year if you earn 25K
But since you are starting now, and the tax year runs from jan to dec, you will actually pay less tax.
(note that this is important so that you don't get a shock next january when you start paying a full years tax) 

For now, figure out roughly what you will be paid from now until the end of december ( roughly 25K / 12 * 7) + a few days in May.
Say ~ 15K 
This will be your taxable pay
If you put that into the calculator you will see that you will not have to pay any tax this year. ( you will be under the threashold.)

Note, this depends on you getting your tax credit sorted out now, so that your employer is aware of your tax situation.

Also note you will have to pay PRSI

ETA: Note, I am assuming that by saying ' this is my first real job' that you mean that you had sumer jobs before so so haven't earned anything since the beginning of the year. If my assumption is wrong, you should ignore my reply


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## ClubMan (11 Jun 2007)

Good point about the mid year start and its impact on tax payable!


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## junii (12 Jun 2007)

Blinder said:


> The 1480 is the tax you wll pay this year if you earn 25K
> But since you are starting now, and the tax year runs from jan to dec, you will actually pay less tax.
> (note that this is important so that you don't get a shock next january when you start paying a full years tax)
> 
> ...




Thank you for sharing this information with me. I am in a little bit of a complicated situation as I was doing some work recently for a company and it may be a week or two before I get my P45 and tax credit cert off them. Is there really a rush to get this to my employer?


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## ClubMan (12 Jun 2007)

Your earnings from the previous company are presumably assessable for income tax so if necessary you may need to do a _Form 12 _tax return to make sure that your tax affairs are up to date for 2007 (and previous years?).

You should get your _P45 _when you leave a job so I don't really see why there should be any delay. You don't get your tax credit cert from your (former) employer - you get this directly from _Revenue _and they also send your new employer a tax deduction card for payroll purposes. You want to get these things sorted ASAP when you take up a new job.


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## junii (12 Jun 2007)

ClubMan said:


> Your earnings from the previous company are presumably assessable for income tax so if necessary you may need to do a _Form 12 _tax return to make sure that your tax affairs are up to date for 2007 (and previous years?).
> 
> You should get your _P45 _when you leave a job so I don't really see why there should be any delay. You don't get your tax credit cert from your (former) employer - you get this directly from _Revenue _and they also send your new employer a tax deduction card for payroll purposes. You want to get these things sorted ASAP when you take up a new job.



It was a short stint so I would say im still in the non-taxable bracket.
It's my own fault really that I let it slip, it was a contract and i'd finished with them before I got the tax credit cert and all sorted. I had no p45 as I had not been working before in this tax year, I was doing a course. Anyways I waiting to get my final payments through this week and then will request the p45. I had been paying emergency tax. 

It was silly to have let it by the layside but I won't let it happen again.


How will revenue know to send out the tax credit cert to my new employer?


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## ClubMan (12 Jun 2007)

junii said:


> It was a short stint so I would say im still in the non-taxable bracket.


Don't assume anything! You need to add up your total projected earnings for the year to see what tax liabilities you might have. In any case you need to declare income even if there is no liability as far as I know.

I suspect that you might want to get independent professional advice on your tax situation. As a contractor in the past it would have made sense for you to have engaged an accountant to help you with this. 


> How will revenue know to send out the tax credit cert to my new employer?


Normally when the employer gets your _P45 _things should be processed based on that. Your employer should get a tax deduction card and you should get a new statement of tax credits.


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## junii (12 Jun 2007)

ClubMan said:


> Don't assume anything! You need to add up your total projected earnings for the year to see what tax liabilities you might have. In any case you need to declare income even if there is no liability as far as I know.
> 
> I suspect that you might want to get independent professional advice on your tax situation. As a contractor in the past it would have made sense for you to have engaged an accountant to help you with this.
> 
> Normally when the employer gets your _P45 _things should be processed based on that. Your employer should get a tax deduction card and you should get a new statement of tax credits.




The revenue will know that I was working for that short stint as it's a very legit ltd. company, they would have declared any money they paid me. I may just ask the head accountant for advice on this; it would probably be expensive to hire a personal accountant for such a relatively small thing.

I don't think theres any chance of me getting in any trouble for anything seeing as the company I was working before as I said would have declared tax. In fact they definintely were as I was paying  emergency tax.


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## ClubMan (12 Jun 2007)

junii said:


> The revenue will know that I was working for that short stint as it's a very legit ltd. company, they would have declared any money they paid me.


I'm not suggesting that they are not legit but if you were an independent contractor then your tax issues would be your own responsibility. If you were PAYE then Revenue should have some info about you but it's still your own responsibility to ensure that your tax affairs are correct and that you are not under or over paying tax and _PRSI _etc.


> I don't think theres any chance of me getting in any trouble for anything seeing as the company I was working before as I said would have declared tax. In fact they definintely were as I was paying  emergency tax.


If you were paying emergency tax then you should probably have been entitled to tax back once your credits etc. came through. If this never happened then you could still be due tax back.


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## dollydaw (15 Jun 2007)

[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]hi 
I'm in a sort of similar situation, starting a contract so will be liable for about half the year. read this on revenue website: [/SIZE][/FONT]*
3. Do I pay tax on everything I earn?*        Your weekly/monthly wage is taxed at the standard rate of tax up to your          weekly/monthly cut off point; any income in excess of your cut off point          is taxed at the higher rate of tax. Your weekly/monthly tax credits are          offset against this gross tax to give you your tax payable figure.

How do i find out my tax credit? and is this the same if i register for self employed?
I'm actually a bit clueless and not really sure what a tax credit is and on revenue website it says a tax credit is a tax credit which doesn't exactly shed much light. 
Also Is the threshold the same for everyone?


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## ClubMan (15 Jun 2007)

dollydaw said:


> How do i find out my tax credit? and is this the same if i register for self employed?


No - tax credits and _PRSI _rates for _PAYE _and self employed are different. You need to look at the self employed info on _Revenue _and preferable get indepenent, professional advice (e.g. from your accountant).

A tax credit is a number that you deduct from gross tax to give net tax. That's all.


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## dollydaw (18 Jun 2007)

thanks
only the reason I left the revenue website to come here was that i couldn't make head nor tail of it. 
where would i find an accountant and how much would they cost to sit down for an hour?
you mentioned 
'A tax credit is a number that you deduct from gross tax to give net tax. That's all.'

so does that mean if i have a tax credit of one thou, and i earn 30 thou and my tax is 6 thou that i subtract one thou from 6 thou?
??
thanks


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## ClubMan (18 Jun 2007)

dollydaw said:


> so does that mean if i have a tax credit of one thou, and i earn 30 thou and my tax is 6 thou that i subtract one thou from 6 thou?
> ??


Yes.

Note that the calculator that I linked to earlier is a little confusing because (in order to support earlier tax years when tax free allowances rather than tax credits were used) _Karl Grabe _still uses the tax free allowance approach to the calculations. However he seems to have also added the tax credits gross/net tax calculations under the heading _"COMPUTATION OF NET TAX PAYABLE BY YOU €:"_. This is where you see what gross tax you pay at 20% and 41% and then the resulting figure is reduced by your tax credits to determine your net tax.

This thread contains a summary of the common tax credits/reliefs available but what you are entitled to depends on your specific circumstances.

Are you paying too much tax? A guide to tax credits


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## dollydaw (18 Jun 2007)

thanks
on that link it says tax credit for a Single Person: €1,630
its says *PAYE Tax Credit: €1,490

*so would the €1,630 apply to me? as I'm not going to be PAYE

again i checked business info on revenue and couldn't find this.

do i deduct my business expenses, before determining my income, for tax purposes?

Looking at VAT requirements I saw that I only have to apply if my annual turnover is over €35,000. Is turnover the money coming in before i deduct expenses?
So if i get in 40 thou and have 7 thou as expense, would i then have to register for VAT?


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## ClubMan (18 Jun 2007)

dollydaw said:


> on that link it says tax credit for a Single Person: €1,630
> its says *PAYE Tax Credit: €1,490
> 
> *so would the €1,630 apply to me? as I'm not going to be PAYE


No.


> again i checked business info on revenue and couldn't find this.
> 
> do i deduct my business expenses, before determining my income, for tax purposes?
> 
> ...


I cannot answer these questions and would defer to the expertise of a professional tax advisor/accountant on them.


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## Nige (18 Jun 2007)

dollydaw said:


> thanks
> on that link it says tax credit for a Single Person: €1,630
> its says *PAYE Tax Credit: €1,490*
> 
> so would the €1,630 apply to me? as I'm not going to be PAYE


 
You will get the single person tax credit, but not the PAYE credit.



> Looking at VAT requirements I saw that I only have to apply if my annual turnover is over €35,000. Is turnover the money coming in before i deduct expenses?
> So if i get in 40 thou and have 7 thou as expense, would i then have to register for VAT?


 
The registration limit is the turnover amounts, so regardless of your expenses, if you have sales in excess of €35k in a year, you must register for VAT.


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## dollydaw (18 Jun 2007)

Ok thanks 
If all goes well and i get to 35k i've no prob hiring an accountant, 
but if i'm to struggle around with 15k or 20k i would like to do my returns myself. I assume you can register for vat later if the need arises..
My last question is:
If i'm self-employed with two main separate activities and one is losing money and the other is not can i offset losses from the first in calculating my taxes from the second?
??


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## junii (18 Jun 2007)

Ok, to claim emergency tax which I now need to do, what is the procedure?


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## ClubMan (18 Jun 2007)

If you mean for this tax year then you just need to get your tax credits/deduction card sorted out and it should balance out automatically. If you mean for one of the previous four tax years then you need to write to Revenue with details of your _P60 _and maybe even a _Form 12 _return to get things balanced for the year in question. If you were ever self employed/assessed then the procedure may be different and you should ask your accountant.


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## Nige (18 Jun 2007)

junii said:


> Ok, to claim emergency tax which I now need to do, what is the procedure?


 
You don't claim emergency tax.

If an employer subjects you to emergency tax, they will then refund you the excess tax deducted when they receive your proper tax credit certificate. 

If a person is on emergency tax at the end of the year, they are likely to have overpaid tax for that year and should send their P60(s) to the tax office for a refund.


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## Nige (18 Jun 2007)

dollydaw said:


> My last question is:
> If i'm self-employed with two main separate activities and one is losing money and the other is not can i offset losses from the first in calculating my taxes from the second?
> ??


 
Yes


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