Emergency Tax Basis
WHEN TO USE EMERGENCY TAX BASIS
An employer applies the Emergency basis of tax to a new employee's earnings where :
- they have not yet received a tax certificate issued to them by Revenue for the employee
- they have not received a RPN (Revenue Payroll Notification) for the employee
- they have received a RPN (Revenue Payroll Notification) but it indicates that the Emergency basis applied to the employee in their previous employment
- they have received a RPN (Revenue Payroll Notification) without a PPS number stated
WHAT PAY DOES EMERGENCY TAX APPLY TO
Emergency Tax is calculated on the gross pay (after deduction of Pension contributions and permanent health contributions where relevant). Different rules apply depending on whether or not the employee provides an employer with his/her PPS Number.
WHERE THE EMPLOYEE DOES NOT PROVIDE A PPS NUMBER
Where the employee does not provide their PPS Number, the higher rate of tax and USC applies to all earnings while on the Emergency Basis.
If a new employee does not hold a PPS Number, they should be advised to call in person to any Social Welfare Local Office and request
Leaflet SW100 in order to apply for a PPS Number. When they have been allocated their PPS Number from the Department of Social Protection, then they should apply to Revenue for their Tax Credits and SRCOP via myAccount.
EMERGENCY TAX BASIS AND REFUNDS
An employer may not make a refund of tax under the Emergency basis. In these circumstances the employer applies the Revenue set emergency tax credits and SRCOP to an employee's earnings dependent on the presence of a PPS number and the length of time for which the emergency basis continues to apply.
Once the employer receives a RPN indicating the tax credits and SRCOP to be applied to the employee, plus the tax basis (either Cumulative or Week 1 basis), then a PAYE/USC refund may occur. A refund will occur where:
- the RPN indicates Cumulative Basis, AN
- the PRPN details apply a level of tax credits and SRCOP greater than those previously applied under the Emergency basis, AND
- there is no underpayment of PAYE/USC carrying forward from previous employments within the tax year, AND
- there has been a previous deduction of PAYE/USC within the tax year
Once these circumstances are satisfied and the RPN has been imported or the employee's Revenue details updated a PAYE/USC refund will be calculated and applies automatically in the subsequent pay period.
Emergency Basis: Emergency Rates and Cut-Off Point
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 must set up the employee record. Within the employee record there is a Revenue record within which you set the varying PAYE, PRSI, USC and LPT details particular to the employee.
To set the basis of calculation;
- Access the Revenue Tab for the employee.
- Within the PAYE/USC section flag the appropriate calculation basis for the employee to whom the record belongs.
Emergency Tax Basis: flagging the Emergency calculation basis on the employee record
SEPARATE PERIODS OF EMPLOYMENT WITH ONE EMPLOYER TREATED AS ONE CONTINUOUS PERIOD FOR EMERGENCY BASIS PURPOSES
It is important to note that where an employee has separate periods of employment with one employer in one income tax year, to which
the emergency basis applies, the employment is deemed to commence at the start of the first of these periods and continue to the end
of the last period of employment or 31 December whichever is earlier.
Emergency Tax Basis: Two employments treated as a continuous periods
The RPN (Revenue Payroll Notification) will dictate if the emergency basis is still in operation when the second employment period commences with the same Employer.