This payroll tax will vary depending on the amount that the employee is paid. In 2020, the standard rate of income tax is 20%, and the higher rate is 40%. Generally, all employment income is subject to income tax, though it may be reduced depending on whether an employee has claimed for tax relief (for example, pension contributions). When income tax is calculated, this is reduced depending on the tax credits available for each employee.
Since the beginning of 2019, new rules were introduced, and it is now the employee’s responsibility to ensure that the correct tax credits are applied. As the employer, you will download the employees tax profile from the revenue for each payroll run. Most PAYE employees will usually have a personal tax credit (€1,650) and a PAYE tax credit (€1,650) at a minimum as a deduction in your payroll run. However, if these do not appear in the tax profile download for a given employee, it is likely that the employee has allocated these credits to a separate employment elsewhere or they may have been allocated to a spouse.