What You Need To Know About... Understanding Your Payslip
It's a long month and if you're anything like us, the only thing you're thinking about when you get a payslip is that your bank balance will be finally be back in the black and you'll be able to afford a well-deserved cocktail on Saturday night.
However, there's a lot of important information on that little sheet so before you throw it in the bin and do a happy dance around your desk, take a minute to look at the details and make sure everything is in order. We know it can be a little confusing so here's a breakdown of what you might see.
The purpose of a payslip is to outline your gross income, any deductions and your net income, namely the amount that ends up your pocket.
Usually, the left column will outline your income and details of the hours that you've worked that week/month. Standard hours will be calculated at the agreed rate, with any additional work such as overtime listed separately. The amount listed in this column will reflect your agreed salary but does not account for any deductions that are necessary.
The column on the right will list all the sums of money that have been subtracted from your wages. It usually doesn’t make for very pleasant reading but take a deep breath and use our guide to all those unpleasant codes.
PAYE: This is the tax that you pay on your weekly wage. Each employee has a different Standard Cut-Off Point, depending on their circumstances, and this is the portion of your money on which you will pay 20 per cent tax. Anything you earn over this amount will be taxed at 40 per cent. Revenue also allocates a certain amount of Tax Credits, again depending on an individual’s circumstances. This amount is subtracted from your ‘gross tax’, leaving your with the final sum that is due each week/month. You can find more details on calculating your tax here.
When starting a new job, make sure to contact Revenue and get your tax affairs in order begin you begin or you may be taxed at much higher ‘Emergency’ levels. If you’re not sure, have a look at the bottom of your payslip for the letter ‘E’ under ‘Tax and PAYE Details’. Your Standard Cut-Off and Tax Credits should also be listed at the bottom of the slip.
PRSI: This stands for Pay Related Social Insurance, which is paid by employers and employees. This payment was previously known as ‘stamps’ and goes towards covering the cost of social welfare benefits and pensions. There are many different bands of PRSI, depending on your job. Most employees in Ireland pay Class A PRSI, which can entitle you to the full range of social insurance payments that are available from the Department of Social Protection (dependent on meeting the qualifying criteria).
The other classes of social insurance are Classes C, D, B, E, H, J, S, K, M, and P. If you are insured under one of these classes, you are paying insurance at a lower rate than Class A contributors, which means that you are not entitled to the full range of social insurance payments. If you don’t know what you are paying, look for your PRSI Code at the bottom of the payslip and you’ll find more detail on the different classes, click here.
USC: USC stands for Universal Social Charge and was brought in to replace both the Health Levy and Income Levy. If your gross income is more than €10,036 per year, then you have to play the USC on all of your income. For sums up to €10,036, USC is charged at two per cent but this increases to four per cent for sums between €10,036 and €16,016. Anything above €16,016 is charged at seven per cent.
Reduced rates of USC are available to people aged 70 or over whose aggregate income for the year is €60,000 or less or medical card holders under 70 whose aggregate income for the year is €60,000 or less. The reduced rate stands at two per cent for anything under €10,036 and four per cent for anything above this amount.
Other Deductions: If you are paying any pensions or subscriptions, they will also be listed in this column.
At the extreme right, you will see a row of totals and these will show your gross income (before deductions), total deductions (the amount taken from your salary) and you net pay (the final amount that you will receive).