calculating paye income tax

Apologies if this has been covered elsewhere or is an obvious question but how is paye tax calculated from your wages?

For example, if someone earns 500 a week and their tax credit is 100 a week, then the remaining 400 is subject to tax? In this example it would be 20% of 400 (80 euro).
Or is the income tax calculated when all other deductions are taken eg PRSI, VHI?

I am just trying to calculate how an increase in the rates of tax will effect me, but looking at my existing pay packet I cannot work out how the amount of PAYE income tax has been arrived at.

The basic idea is as follows:

Gross income 500
Less:
Pension premium (20) ==> if you pay these through your payslip
Income protection (30) ==> if you pay these through your payslip
'Reckonable income' 450

Tax due as follows
450 x 20% 90 ==> assumes you are only paying at 20%
Less:
Tax credit for period (100)
Tax deducted Nil ==> Non-refundable credit

In this example, no PAYE would be subtracted from your gross.

There are further calculations for PRSI which are quite complicated to explain. The above outlines how the PAYE only is calculated

deadlyduck said:

The basic idea is as follows:

Gross income 500
Less:
Pension premium (20) ==> if you pay these through your payslip
Income protection (30) ==> if you pay these through your payslip
'Reckonable income' 450

Tax due as follows
450 x 20% 90 ==> assumes you are only paying at 20%
Less:
Tax credit for period (100)
Tax deducted Nil ==> Non-refundable credit

In this example, no PAYE would be subtracted from your gross.

There are further calculations for PRSI which are quite complicated to explain. The above outlines how the PAYE only is calculated

Click to expand...

Thanks for that. It makes sense now.
I was subtracting the tax credit from the gross pay and then calculating the tax instead of working out the tax at the beginning and then removing the tax credit at the end.