Payroll Terms and Abbreviations
To help you better understand payroll, we’ve put together a list of terms and abbreviations.
|Revenue||Revenue is reponsible for the administration and collection of taxes.|
|Collector General||The division within Revenue responsible for collecting payments of taxes.|
|Revenue On-line Service (ROS)||ROS is the website you use to register with Revenue for online services. Once you’re registered, you can receive and submit forms directly from and to the Revenue.|
|Department of Social Protection (DSP)||DSP is responsible for looking after the administration of social welfare benefits and pensions.|
|Pensions||Occupational pension schemes are set up by employers to provide benefits for their employees. The employee may be required to make a minimum contribution to the scheme.
There are three different pension schemes in Payroll.
* Pension and Pension – RAC deductions are deducted before tax but after pay related social insurance (PRSI) and the universal social charge (USC).
* Pension – PRSA deductions are deducted before tax and USC but after PRSI.
|Payroll||The term payroll refers to the calculations you make to work out your employees’ pay and deductions under the Pay As You Earn scheme. It covers all payments you use to make up your employees’ gross pay and all deductions, including tax, PRSI and USC. It also covers the financial records you prepare and keep as part of this process. These records help you calculate how much you need to pay to the Revenue Commissioners as an employer. It’s important that as an employer that you keep accurate payroll records.|
|Gross pay||Gross pay is the total pay before tax, PRSI, USC and any other deductions. Gross pay can include salary, overtime, holiday pay, sick pay, bonus, commission and other payments.|
|Net pay||Net pay is the employee’s actual take home pay, after tax, PRSI, USC and other deductions.|
|Deductions||Amounts deducted from the employee’s pay. Deductions can be deducted from the employee’s gross pay or net pay. If a deduction is taken from the employee’s gross pay, it can reduce the amount of tax, PRSI snd USC an employee pays.|
|Personal Public Service (PPS) number||Formerly known as an RSI number, this is the employee’s unique reference number used in any transactions you or your employee has with public bodies.|
|Pay As You Earn (PAYE)||PAYE is the scheme through which tax is deducted from employees and collected by employers on behalf of Revenue. Employer’s then pay this to Revenue in their monthly or quartely payments.
Tax calculates based on the employee’s tax status, their taxable pay, their standard rate cut off point (SRCOP) and tax credits. This information can be found on the employee’s P45 or the P2C.
|Standard rate cut off point (SRCOP)||Each employee has a SRCOP. This is the cut off point at which they stop paying tax at the lower rate of 20% and start paying the higher rate of 41%.|
|Tax credit||Tax credits are based on an employee’s personal circumstances and are used to reduce the amount of tax they pay. They are non-refundable and can be cumulative, depending on the employee’s tax status.|
|Tax status||There are three different tax statuses which determine how tax is calculated:
* Emergency tax status – Tax is calculated on the earnings for the current period only using a set SRCOP and tax credit value determined by Revenue.
* Week 1 tax status – Tax is calculated using the SRCOP and tax credit value on the P45 but it’s not cumulative, it’s based on the taxable pay for the current period only.
* Normal tax status – Tax is calculated on a cumulative basis taking into account the employee’s taxable pay, SRCOP and tax credits from 1 January.
|Pay Related Social Insurance (PRSI)||Also know as social insurance, this is a statutory deduction of a fixed percentage of the employee’s earnings. allowing access to benefits and services. Employees are given a contribution class and sub-class by DSP and these determine what percentage is used to deduct PRSI from their pay. If you’re not sure what class to use for your employee, you should check with DSP.|
|Universal social charge (USC)||Any employee with earnings above €12,012 per year must pay USC. This is a set percentage based on their earnings and pay frequency. Employees aged 70 or older, and medical card holders pay a set contribution of 1.5% on earnings up to €12,012 and 3.5% on the remaining balance. USC rates are included on the P2C.|
|Benefit in kind (BIK)||Benefits in kind are non-cash benefits you provide for your employees. The employee doesn’t receive the money in their pay but they still have to pay tax, PRSI and USC on the cash equivalent value of the benefit. Examples include, medical insurance, private use of a company car or meal vouchers.|
|Personal retirement savings account (PRSA)||Not to be confused with PRSI, PRSA is a government approved long-term saving account helping employees save for their retirement. If your company does not have an occupational pension, you must provide your employees with access to at least one Standard PRSA scheme.|
|P2 Certificate (P2C)||The P2C is the form used by Revenue to provide details of employees’ tax credits, SRCOP and USC rates. This is issued by Revenue at the start of the new tax year and when an employee starts a new job. To ensure your employees tax and USC calculates correctly, you need to import the P2C information into your software.|
|12A||To be completed by an employee who has never worked in Ireland before. This is then submitted to Revenue, which issues a valid P2C for the employee.|
|P45||The P45 is a form produced when an employee leaves a job. It includes details of the employee’s previous pay, tax and PRSI.
There are four parts to a P45:
Part 1 – This is submitted by the employer to Revenue to advise the employee has left their employment. The remaining three parts are given to the employee.
Part 2 – This is the new employer’s copy to keep for their records.
Part 3 – Submitted to Revenue by the new employer to advise that the employee is now working for them.
Part 4 – If the employee isn’t going on to another job, they can use this part to claim unemployment benefit.
|P46||If an employee does not have a form P45 or has lost it, they need to complete a P46. The new employer sends this to Revenue who then issues a P2C to both the employee and employer.|
|Tax Deduction Card (TDC)||A detailed listing of the employees’ earnings, tax and PRSI per pay period. If operating a manual payroll, Revenue issue an new TDC per employee at the start of the tax year.|
|P30||The monthly payslip for employers to make tax, PRSI and USC payments to the Collector General. The form and the payment must be submitted by the 14th of the following month.
Note: Employers whose total tax and PRSI payments for the year are €30,000 or less can submit their tax and PRSI payments quarterly.
|P35||The P35 is the annual declaration and certificate of tax, PRSI and USC for all employee’s in your employment for the tax year. This must be submitted to the Collector General no later than 15 February.|
|P60||At the end of each tax year, you must give a P60 to each of the employees still working for you on 31 December. The P60 includes cumulative earnings, tax, NI, PRSI and USC for the tax year.|