Amounts on P60

[D'oh]

Hi,

Can anyone enlighten me as to how my tax is calculated on the P60 please?

If i earned Gross 61,992.58 and paid 2222.50 during the year into a pension and 466.32 into VHI.
What should my personal tax credit be? Im 30 and single.
Am i right that this gets subtracted from total and then the PAYE is calculated?
How is PRSI calculated? Employee and employers contributions.

Im a curious bunny.

Thanks

 

[ClubMan]

Have you tried [broken link removed]? To account for the pension contributions (which should qualify for full tax/PRSI relief) reduce your gross by €2222.50 before entering it into the calculator.

The most common tax credits and allowances for 2005 and 2006 are listed [broken link removed]. See also this thread.

With the tax credit system you calculate the amount of tax that you pay at 20% and 42% to give your gross tax. Then you subtract your tax credits to give your net tax.

Note that Karl's calculator still uses a tax free allowance style approach to calculations which can be a little confusing. He does this so that he can support calculations for years before the tax credits system came in.

PRSI calculations are outlined here. They are a bit convoluted to be honest. A certain amount each week/month is exempt from 4% PRSI and then above a certain cumulative annual gross is also exempt from 4% PRSI. Everything is subject to 2% health levy. Pension contributions up to the normal age related limits are exempt from tax, PRSI and health levy. (I'm assuming Class A PRSI here).

If you made your pension contributions off payroll then you need to claim tax and PRSI relief manually.

Post the detailed figures on your P60 (and maybe your 2005 and 2005 statement of tax credits) if possible so that people can comment. If you think that you have overpaid tax or PRSI then write to Revenue with a copy of your P60 and ask them to rebalance your affairs.

Hope this helps.

 

[D'oh]

Is the upper tax percentage 42%? I thought it was 40%.

Would this be right?

61992.58 - pension (2222.50) = 59770.08

20% of 29500 = 5900-2750 (tax credit)= 3150

59770.08-29500= 30270.08 x 42% = 12713.43 +3150=15863.43

Therefore 15863.43 = total tax paid???

 

[ClubMan]

Is the upper tax percentage 42%? I thought it was 40%.

42% as stated on your statement of tax credits.

61992.58 - pension (2222.50) = 59770.08

Yes - that's taxable income subject to tax and PRSI/health levy deductions.

20% of 29500 = 5900-2750 (tax credit)= 3150

Single person standard rate band for 2005 was actually €29,400

59770.08-29500= 30270.08 x 42% = 12713.43 +3150=15863.43

Therefore 15863.43 = total tax paid???

Nearly - Karl Grabe's tax calculator comes up with (note that VHI subscription is included - sorry about the formatting):

**************************************************
Calculate end of year tax returns (Single)
Tax year for calculations is 2005
(Form P21C)
Selected currency is Euro €
**************************************************

INCOME FROM EMPLOYMENTS €:
Income for Self                59770.08
Other Incomes/Benefits         0.0
                        --------
Gross Statutory Income         59770.08


CREDITS (@20%)€:
Personal Allowance            7900.0
PAYE Allowance                6350.0
Medical Insurance Allowance    0.0
Service Charge Allowance        0.0
                        --------
Total Credits (@20%)        14250.0


ALLOWANCES (@42%) €:
Med Expenses, Perm Health    0.0
Expenses                    0.0
                        --------
Total Allowances            0.0

COMPUTATION OF NET TAX PAYABLE BY YOU €:
Gross Statutory Income         59770.08
 Less Allowances before tax    0.0
                        --------
Taxable Income                 59770.08
   Which is chargeable as follows:
         29400.0 @ 20% =        5880.0
         30370.078 @ 42% =        12755.433
                        --------
Income Tax due                18635.434
 LESS €:
  Tax Credits (14250.0 @20%)    2850.0
Total Income Tax due        15785.434
Net Tax deducted under PAYE    0.0
                        --------
Tax Underpaid                € 15785.434

and for PRSI:

PRSI Liability for Tax Year 2005
For Self:
  PRSI ClassA1 37576.0 @4.0% = € 1503.04
  Health Levy  59770.08 @2.0% = € 1195.4016
  Youth Levy   59770.08 @0.0% = € 0.0
  Total PRSI ClassA1 contribution = € 2698.4417

Your approach to the calculations looks more or less correct although I'd normally work out the standard rate tax, then the high rate tax, add the two and then subtract the credits. You have the standard rate band figure wrong. You are also ignoring VHI subscription relief and PRSI/health levy.

However perhaps it's starting to make a bit more sense now?

 

[D'oh]

"42% as stated on your statement of tax credits."
Ive a tendency to throw mail away without reading properly.

I think i have it.

Where does the VHI relief come in?? Is that taken off the gross taxable?

Thanks Very Much Clubman!

 

[ClubMan]

You should not throw away Revenue documents!

My mistake on VHI - still living in the past when relief was granted through allowances/credits. Nowadays [broken link removed] so I should not have included VHI premiums when entering the data into the calculator at all! The exception is where you employer pays for the insurance, you pay tax/PRSI on the BIK through payroll and you also claim a credit in respect of the premiums paid. See [broken link removed].

Make sure that you understand the calculations and are happy that everything is in order - here and on your payslips - as mistakes do happen. Also make sure that you clam all relevant credits/reliefs as outlined earlier.

Cheers.

 

[D'oh]

Thanks again.

Sorry.
Where did this figure come from?
PRSI ClassA1 37576.0

 

[ClubMan]

Thanks again.

Sorry.
Where did this figure come from?
PRSI ClassA1 37576.0

Your taxable earnings are €59,770.08

You pay 2% health levy on the lot - i.e. €1,195.40

You pay 4% PRSI on up to €44,180 of this ([broken link removed]) - with the exception of the first €127 p.w. (if paid weekly), €254 per fortnight (if paid fortnightly) or €551 p.m. (if paid monthly). For simplicity Karl uses the weekly exemption but the precise details may vary if you are paid monthly.

So €44,180 - (€127 * 52) = €44,180 - €6,604 = €37,576 @ 4% = €1,503.04

So PRSI (€1,503.04) + health levy (€1,195.40) = €2,698.44

Note that it's common to refer to the total figure as PRSI even though it is, in fact, a combination of PRSI and health levy.

Told you PRSI/health levy was even more complex than tax!

 

[z103]

I should not have included VHI premiums when entering the data into the calculator at all!

Isn't VHI taxable?

For example, if I pay €100 should I pay PRSI/PAYE on this, because I also get tax relief at source?

 

[ClubMan]

Isn't VHI taxable?

For example, if I pay €100 should I pay PRSI/PAYE on this, because I also get tax relief at source?

Employer paid private health insurance premiums are treated that way - yes. But I did say...

My mistake on VHI - still living in the past when relief was granted through allowances/credits. Nowadays [broken link removed] so I should not have included VHI premiums when entering the data into the calculator at all! The exception is where you employer pays for the insurance, you pay tax/PRSI on the BIK through payroll and you also claim a credit in respect of the premiums paid. See [broken link removed].

 

[z103]

Okay, thanks Clubman.

 

[z103]

Where the employer pays the full premium for employees and the employee does not make good any amount to the employer, PAYE and PRSI must be applied to the gross (pre Tax Relief at Source) premium. To ensure that the employee is granted the relief afforded by TRS, the employee will be given a tax credit (at the standard rate) for the gross premium in his or her certificate of tax credits.

Example;

Billed this period = €39.60
TRS Billed this period = €9.90
Gross Billed this period =€49.50

So I tax €49.50 as a benefit in kind.
Then I apply for tax credits.

Is this correct? - surely not. Sounds very over-complicated. What's the point in separating out the TRS?