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 |
€3,550 |
€68.27 |
| Cut-off point |
€40,000 |
€769.23 |
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 €800; 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 |
€68.27 |
| Tax to deduct for week 1 |
€11.73 |
Week 2
| Description | Amount |
|---|
| Pay this week |
€800 |
| Tax weekly income to cut-off point (€707.69) at 20% |
€153.85 |
| Tax €42.31 (€750 - €707.69) at 40% |
€12.30 |
| Gross tax |
€166.15 |
| Less weekly tax credit |
€68.27 |
| Tax to deduct for week 2 |
€97.88 |
Week 3
| Description | Amount |
|---|
| Pay this week |
€250 |
| Tax full pay of €250 at 20% |
€50.00 |
| Less weekly tax credit |
€68.27 |
| 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.