Methods of calculating tax

Tax exemption and marginal relief


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

Some employees are entitled to tax exemption each year. Similarly, some employees are exempt from Universal Social Charge (USC).

You should only apply tax exemption if you are instructed to do so on the employee’s Revenue Payroll Notification (RPN).

Where tax exemption applies, it is not an instruction that tax is not to be deducted (unlike USC). Instead, the employee is given a special-amount cut-off point and tax credit on their RPN. The higher rate of tax to be applied is the marginal relief rate of 40%.