Income Tax

Income Tax Explained.

Almost all your income is liable to tax. On behalf of Revenue, tax on income that you. earn from employment is deducted from your wages by your employer, which is known as Pay As You Earn (PAYE). The amount of income you earn and your
personal circumstances depend on the amount of tax you have to pay. There are several Income Tax Reliefs that can lower the amount of tax you have to pay.

Your income is subject to the Universal Social Charge (USC). It is deducted from your gross income before any PRSI or pension contributions. You cannot use tax credits or tax relief to reduce the amount you must pay.

Tax Rates and the standard rate cut-off points

Your income is taxed at a certain percentage. Your income level determines the percentage you will pay. The standard rate of tax is where the first part of your income, up to a certain amount, is taxed at 20%. And the amount that it applies to is known as the standard rate tax band. The remainder of your income is taxed at the higher rate of tax @40%.

The Pay and File System

It’s crucial to finish and file a self-assessment tax return each year before the deadline if you get untaxed income from self-employment, rental properties, or even if you are employed but receive income outside of your PAYE function. If you don’t, you could be subject to penalties.
There is a standard deadline for tax payment and tax return filing under self- assessment. Each year, this falls on October 31. The Pay and File system allows you to file your return and pay the balance of tax outstanding for the previous year at
the same time. Under this system, you have to:
● Pay preliminary tax for the current tax year on or before 31 October each
year.
● Make your tax return after the end of the tax year but no later than the
following 31 October.
● Pay any balance of tax due for the previous tax year on or before 31 October.

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