What pay includes
Benefits, advanced payments and sick pay
You can give non-cash benefits to your employee. These are referred to as benefits in kind. The value of these benefits is added to your employee's pay for tax purposes.
Employees' deductions paid by you
If you pay your employee's portion of their Pay Related Social Insurance (PRSI), this must be counted as additional pay. It will be taxed in the normal way.
When paying your employees you should always calculate what tax, if any, is due. If you make a payment to your employee 'free of tax', you must tax the full amount you actually pay to the employee. You will find details of how to calculate the tax on this type of payment in the covering an employee's tax section.
Payments in advance or on account
You can choose to pay your employee or a director in advance or on account. This includes pay credited to a bank account. This payment is taxed as normal pay in the week or month that it is paid.
Payments when an employee is absent due to illness
You can pay your employee while they are absent from work due to illness. These payments are taxed in the normal way.
Your employee may receive Illness Benefit (IB), Partial Capacity Benefit or Occupational Injury Benefit. Revenue will collect any tax due on these payments by reducing the employee's tax credits and issuing an amended RPN. They should not be taxed through the employee's wages. Further information on these are available in Taxation of social welfare benefits.
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