Methods of calculating tax

Cumulative basis


The information on this page refers to your current obligations. For your obligations before 1 January 2019, please see the Employers Guide to PAYE.

An employee’s tax is generally calculated on a cumulative basis. Cumulative tax is the tax due on an employee’s total income from 1 January to the current date. The tax due for any pay period is the cumulative tax payable less the tax already deducted during that year.

You tax an employee on a cumulative basis when you have received a cumulative Revenue Payroll Notification (RPN) for them. The RPN shows an employee’s yearly:

If an employee worked previously in the year, the RPN also shows their previous income and tax and USC paid. You take these figures into account when using the cumulative basis.

There are weekly and monthly Income Tax calendars for your reference.

Refunds of tax

When you operate tax on a cumulative basis, your employees are sometimes entitled to tax refunds. This is outlined in more detail in Refunding tax to employees.

Next: Week 1 basis