Thursday, July 7, 2011

What is PAYE?


The PAYE system came into operation in October 1960 for the sole reason of easing the burden of tax collection and payment. (see our "Complete guide to PAYE & Payroll in Ireland")

The PAYE system is the method used by the Revenue Commissioners to collect the following based on an employee's income:

- Income Tax
- Universal Social Charge (Introduced in Tax Year 2011)
- PRSI (Pay Related Social Insurance)

Nearly all income is liable to tax. Tax on income earned from employment is deducted by the employer on behalf of the Irish Government. This is known as Pay As You Earn (PAYE). The amount of tax paid depends on
the amount of the income and on employees personal circumstances.

It is the employer's legal responsibility to record and deduct tax on all taxable income received by the employee.

Tax Year
The PAYE system operates for a period of 12 months from 1st January - 31 December.

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