Help - Tax advice needed for Salesperson

[Finder]

Hi All,

I am having problems understanding how my tax is being calculated. I am PAYE, Single Allowance. I changed jobs in May 06 from basic ( 31500) to a sales role which is basic plus commission( 25000 plus OTE 40000).

However, according to my P45 from Jan - May 06 I earned 13125 gross and paid PAYE 1292.50. Since May 06 - I have earned 21061 gross and paid 4009 PAYE. The ratio doesnt seem right. under my new role I have paid nearly 20% of what I have earned in Tax. My company says its because my end of month commission is bringing me into the 42% tax band and that bascially this is killing me. My question is this and I have asked at work to no avail - is there not some way my tax due can be "evened out" some way over the year? surely something is radically wrong because I have now nearly paid as much tax on € 21061 earned than I did for the whole of 2005 ( gross 31500 paye paid according to P60 4200)

 

[nmh001]

The basic rules are that you can earn €2,666.66 per month at the lower tax rate (20%) with the balance taxed at 42%. The total of these 2 tax amounts is then reduced by your monthly tax credit which is €260.

That explains the PAYE part of your tax deductions and should be quite easy to reconcile to your payslip.

Separately there are 2 prsi deductions. The first is the health levy which is 2% of total income. The 2nd is prsi which is 4% however the first €550.33 of income per month is prsi-free. There is also a ceiling above which no prsi is payable – that is €39,994 for 2006 (€46,600 less 12 monthly exempt amounts of €550.33).

I can’t reconcile the figures you quote to the above but if you post the exact details from your latest payslip it should be possible to see if anything is going wrong.

At a quick glance I don't know if you’re overpaying tax. Your post is from 19/11/06 so the figures you quote, assuming they are up to and including October 06, show that you’ve earned about 33% more than you did last year. That obviously increases significantly your tax bill because every extra Euro you’ve earned has been taxed at 47%.

Your PAYE bill in 2005 should have been €3,912. That is ignoring the health levy and prsi.