Hi guys,
I've just set up a limited company (I am a prop director) and I want to start paying myself a salary starting as soon as possible. I have a good understanding of the rates of PRSI/TAX/USC I need to pay and my tax credits but I am unsure of how you need to divide all of these proportionately based on when I pay myself a salary.
For example: If I were to pay myself an annual salary of 42,000 payable monthly on 11-Jan and the following is true for me:
1. Tax credits = 1650
2. Class S PRSI = 4%
3. Lower tax band < 32800, Higher tax band > 32800
4. USC bands = 10,036 @ 2%, next 5,980 @ 4%, remainder at 7%
then would the following logic be correct:
- 11-Jan is in the 1st month of the tax year thus I proportion the annual amounts of each item by 1/12 eg:
Gross pay = 42,000/12 = 3,500
Less:
PRSI 4% * 3,500 = 140.00
Tax @ Lower = 32,800*(1/12) = 2,733.33 @ 20% = 546.67
Tax @ Higher = (3,500-2,733.33) = 766.67 @ 41% = 314.33
USC @low rate = 10,036*(1/12) = 836.33 @ 2% = 16.73
USC @mid rate = 5,980*(1/12) = 498.33 @ 4% = 19.93
USC @high rate = (3500-(836.33+498.33)) = 2165.33 @ 7% = 151.57
Add:
Tax credits of 1,650*(1/12) = 137.5
Or do I take credit for 2/52 of everything as 11th Jan is in the 2nd week of the year? Or is my logic above skewed?
I have an accountant but I try to keep his tasks to the bare minimum so I'd really appreciate any help!
I've just set up a limited company (I am a prop director) and I want to start paying myself a salary starting as soon as possible. I have a good understanding of the rates of PRSI/TAX/USC I need to pay and my tax credits but I am unsure of how you need to divide all of these proportionately based on when I pay myself a salary.
For example: If I were to pay myself an annual salary of 42,000 payable monthly on 11-Jan and the following is true for me:
1. Tax credits = 1650
2. Class S PRSI = 4%
3. Lower tax band < 32800, Higher tax band > 32800
4. USC bands = 10,036 @ 2%, next 5,980 @ 4%, remainder at 7%
then would the following logic be correct:
- 11-Jan is in the 1st month of the tax year thus I proportion the annual amounts of each item by 1/12 eg:
Gross pay = 42,000/12 = 3,500
Less:
PRSI 4% * 3,500 = 140.00
Tax @ Lower = 32,800*(1/12) = 2,733.33 @ 20% = 546.67
Tax @ Higher = (3,500-2,733.33) = 766.67 @ 41% = 314.33
USC @low rate = 10,036*(1/12) = 836.33 @ 2% = 16.73
USC @mid rate = 5,980*(1/12) = 498.33 @ 4% = 19.93
USC @high rate = (3500-(836.33+498.33)) = 2165.33 @ 7% = 151.57
Add:
Tax credits of 1,650*(1/12) = 137.5
Or do I take credit for 2/52 of everything as 11th Jan is in the 2nd week of the year? Or is my logic above skewed?
I have an accountant but I try to keep his tasks to the bare minimum so I'd really appreciate any help!