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PAYE Tax Credit calculated on an annual basis?

  • 11-10-2007 11:36am
    #1
    air
    Registered Users, Registered Users 2 Posts: 2,830 ✭✭✭


    Hi,
    If you are a PAYE worker and then become self employed within the same tax year, do you get the full benefit of the PAYE tax credit or only the proportion relevant to the number of months you were working as a PAYE worker?

    Also am I right in thinking that your tax liability is just simply calculated as follows:
    20% of net income up to 34k
    + 40% of income above this
    Less tax credits

    Thanks,
    Air.


Comments

  • #2
    Mack£r
    Closed Accounts Posts: 8 ✭Mack£r


    Your Paye salary and self employed profit which becomes your income are added together and tax is calculated less credits less tax already paid
    + 40% of income above this

    41% for 2007 income


  • #3
    air
    Registered Users, Registered Users 2 Posts: 2,830 ✭✭✭air


    Cool, that's what I thought, but would one be entitled to the full years PAYE tax credit?
    Cheers for the update on the higher rate.


  • #4
    Mack£r
    Closed Accounts Posts: 8 ✭Mack£r


    air wrote: »
    would one be entitled to the full years PAYE tax credit?

    Yes, Both sources of salary are added together at the year end and tax calc accordingly, then the full years tax credit is deducted to give Net Tax due


  • #5
    air
    Registered Users, Registered Users 2 Posts: 2,830 ✭✭✭air


    Ok thanks, so you receive a full year's tax paye tax credit if you are employed under PAYE at any point in the year then?


  • #6
    kaiser sauze
    Registered Users, Registered Users 2 Posts: 1,558 ✭✭✭kaiser sauze


    Air, I am not certain of this, but I'd be surprised if you're entitled to the full PAYE credit. It makes no sense to be entitled to the full years' amount.

    At this stage you've likely found this out, unless you are filing online.


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  • #7
    air
    Registered Users, Registered Users 2 Posts: 2,830 ✭✭✭air


    Hi, I never found out for sure so I just erred on the side of caution.


  • #8
    Crumbs
    Registered Users, Registered Users 2 Posts: 1,080 ✭✭✭Crumbs


    For each of the last two years, "my friend" who is self-employed has worked one week as an employee and claimed for the full PAYE tax credit. I'm not 100% sure if it would stand up in an audit though.


  • #9
    air
    Registered Users, Registered Users 2 Posts: 2,830 ✭✭✭air


    On a somewhat related point, there was some guy on the radio the other day talking about PRSI credits and job sharing. Apparently it works out differntly each year depending on the day of the week that the tax year starts, ie one year you'd get half your credits and another year you'd get full credits if you work one week on one week off.

    I'll make enquiries today on the PAYE issue, it's not a hugely urgent for me atm as I overpaid if anything and could always balance that later.


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