Week 1/Month 1 Basis
Week 1/Month 1 Basis is a non-cumulative tax basis. When the Week 1/Month 1 basis is applied each pay period is treated separately without any consideration of previous pay or deductions.
Revenue mainly issue Week 1/Month 1 basis certificates in the following circumstances where:
- There is substantial reduction of tax credits which may cause hardship to the employee.
- There is a lack of information about prior employments or earnings in the current tax year (delay by previous employer in ceasing the employment with Revenue/ROS)
- The residence intentions of a person coming from abroad to take up employment here are not known.
- Tax credits/Standard Rate Bands are transferred between spouses/civil partners or between jobs in the case of multiple employments.
- An employee does not wish his/her new employer to know the details of his/her previous pay and tax.
CALCULATING TAX UNDER WEEK 1/MONTH 1 TAX BASIS
Tax for any week is computed by reference to the Tax Credits and Standard Rate Cut-Off Point (SRCOP) allocated to that particular pay period only.
For the payroll period in which payment will be made in week 5, the periodical tax credit is €63.46 and the SRCOP is €650.00.
For the payroll period in which payment will be made in week 7, the periodical tax credit is €63.46 and the SRCOP is €650.00.
And so on...
Week 1 / Month 1 Basis: Tax Details issued by Revenue
The tax credit and SRCOP is applied to each pay week/month and tax is deducted accordingly. Any unused tax credit or SRCOP in a pay period does not carry forward (there is no re-balancing of subsequent pay to benefit from previously unused tax credit and SRCOP).
Week 1 / Month 1 Basis: Tax Calculation
EMPLOYER DECISION TO APPLY WEEK 1/MONTH 1 BASIS
In the following circumstances Employers, will operate Week 1 Basis, despite holding a Revenue instruction to apply the cumulative basis:
- Payments made to a ceased employee.
- Payments made on Week 53.
- Payments made to an employee who has been out sick and the employer excluded his/her Illness Benefit in calculating pay and tax.
EFFECT OF WEEK 1/MONTH 1 BASIS
The effect of applying the Week 1/Month 1 basis to an employee's gross earnings are:
- Each week's pay and tax is calculated independently without reference to the previous week.
- No refunds are made.
- Week 1 Basis cases are subject to review after the end of the tax year. They will signal on District Check List.
Any undercharge of PAYE/USC arising from the allocation of Week 1/Month 1 basis is collected by Revenue, from the employee, by either restriction of the tax credits of a subsequent year or by assessment.
SETTING THE BASIS OF PAYE CALCULATION IN COLLSOFT PAYROLL
As explained above, the basis of calculation is set at each individual employee level. To assign the correct basis of calculation at each employee level you will have received this from Revenue via the RPN import, which provide the varying PAYE, USC, PRSI and LPT details particular to the employee.
Should the Employer need to amend the Tax basis to a Week 1/Month 1 basis as outline above, you need to amend this on the Collsoft Payroll Software manually. To do this, please follow the steps outlined below:
- Open the relevant Employee detail screen.
- Open the Revenue Tab
- Select the Edit RPN button, to the right of the screen
- A second RPN screen will open. Then select Week 1 as the Calculation Basis
- Save and Close
- The Calculation Basis will now be altered to the Week 1 basis and the software will reflect that this has been amended manually, as shown below. This information will be submitted to Revenue once you export the information by clicking the PSR button. when submitting wages in the next payroll period.