Ann is your employee. You receive a Revenue Payroll Notification (RPN) for Ann showing these tax credits and cut-off point:
Ann's tax credit and cut-off point details
| Description | Amount per year | Amount per week |
|---|
| Total tax credits |
€3,750 |
€72.12 |
| Cut-off point |
€42,000 |
€807.70 |
The RPN indicates that you should tax Ann on a Week 1 basis.
Ann earns different amounts of pay each week. In week 1, she earned €400; in week 2 she earned €850; and in week 3 she earned €250. Here is how you calculate her tax each week:
Week 1
| Description | Amount |
|---|
| Pay this week |
€400 |
| Tax full pay of €400 at 20% |
€80.00 |
| Less weekly tax credit |
€72.12 |
| Tax to deduct for week 1 |
€7.88 |
Week 2
| Description | Amount |
|---|
| Pay this week |
€850 |
| Tax weekly income to cut-off point (€807.70) at 20% |
€161.54 |
| Tax €42.30 (€850 - €807.70) at 40% |
€16.92 |
| Gross tax |
€178.46 |
| Less weekly tax credit |
€72.12 |
| Tax to deduct for week 2 |
€106.34 |
Week 3
| Description | Amount |
|---|
| Pay this week |
€250 |
| Tax full pay of €250 at 20% |
€50.00 |
| Less weekly tax credit |
€72.12 |
| Tax to deduct for week 3 |
€0.00 |
In week 3 you do not refund any tax to Ann, even though she has not used all of her tax credit for that week. This is because she is on a week 1 basis.