INCOME

Income refers to money and other forms of wealth received by a household.

Forms of Income
Income can be regular or irregular.
Regular income is income received on a regular basis, i.e. every week or every month.
Examples include wages and unemployment benefit.
Irregular or additional income is income which cannot be anticipated. Examples include a
lottery win, commission earned on sales or being left money by a relative in a will.

FORMS OF INCOME
REGULAR
Household

Wages, Child Benefit

Student

Pocket Money, Grant

Unemployed
Person
Pensioner

Jobseekers Benefit
Pension

IRREGULAR or
ADDITIONAL
Overtime, Bonus
payment, Dividends,
Money Received in a
Will, Lottery Win
Birthday Money, or
Holiday Work Wages
Wages from Occasional
Work
Wages from Occasional
Work

BENEFIT-IN-KIND (BIK)/PERKS
Most income you receive is in the form of money. However, some people receive non-cash
forms of income. These are often referred to as benefit-in-kind (BIK) or Perks and they are
considered to be part of out income for tax purposes. Examples include:

An employee of Aer Lingus receiving free or reduced price air travel

The use of a company car and/or receiving free fuel, tax or insurance
Free lunch at the company canteen
Discounts received by employees on goods provided by their employer
Medical Insurance paid by employers for employees
Gym club memberships paid by employers for their employees

An unofficial perk is simply stealing. Examples include using the company phone to make
personal phone calls or taking company pens home etc.

Benefit-in-Kind (BIK) refers to a non-cash form of income

Fill in the Worksheet Below

Place a tick in the correct box!

Regular
Income
Wages
Commission
Christmas Bonus
Use of
Photocopier
Clothing
Allowance
Salary
Use of Company
car
Overtime
Lunch Vouchers
Free Petrol
Christmas Party
Discount on
Airline Tickets

Irregular
Income

Perk

Pocket Money

GROSS PAY DEDUCTIONS & NET PAY

Gross Pay
Gross Pay is the total income earned by a person before any deductions are taken out.
If you work 40 hours a week and are paid 20 per hour then your gross pay is 800 per week.
(40 hours X 20 = 800.)
Deductions from Wages
Deductions from gross pay are sums of money that are taken from gross pay. There are two
groups of deductions: Statutory and Non Statutory (or voluntary).
STATUTORY DEDUCTIONS

Statutory Deductions must, by law, be taken from gross wages.

The two main statutory deductions are PAYE and PRSI (USC). The government may from
time to time, also impose a levy (example a pension levy for employees working in the public
sector) on incomes. This is normally a fixed percentage of gross income.
1.
PAYE Pay As You Earn
This is a tax on your income. The money deducted by the employer for PAYE purposes is
sent to the government and is part of the governments overall income.
2.
PRSI Pay Related Social Insurance.
PRSI is a percentage of gross income taken from each employees income and given to the
government. The employer must also pay an additional percentage of the employees income
as PRSI.
3. USC-Universal Social Charge.
The Universal Social Charge(USC) was introduced in January 2011 to replace two other
levies. It is paid as a percentage of income(from 2% to 7%, depending on the size of income)
and all income earners are liable to pay it if their gross annual income is greater 4004(77
per week)
What do you get for your PRSI Contributions?
This payment entitles employees to:
Jobseekers Benefit, if they lose their jobs
A contributory Old Age Pension

 Maternity Benefit out of work due to having a baby

Disability Benefit, when temporarily out of work
NON STATUTORY (VOLUNTARY) DEDUCTIONS
Non Statutory or Voluntary deductions are sums of money taken from the gross wage at
the instruction of the employee. The employee makes theses payments to a named person or
organisation.
Payments into savings schemes (Credit Union), health insurance payments to companies such
as VHI (Voluntary Health Insurance), trade union dues (fees), and payments into a private
pension fund are examples of non-statutory (voluntary) deductions.
Net pay is gross pay less all deductions.
Net pay is sometimes called take-home pay.
Wage Slips
A wage slip (or pay slip) is a written explanation of the calculation of an employees net pay.
An employee must receive one each time he or she is paid.
A simple pay slip

Mary Murphys standard working week is 40 hours paid @ 20 per hour.

Any overtime is paid at time and a half.
She worked 50 hours in the week ending 2/9/2011 (Week # 42).
Her PAYE for the week was 125
Her PRSI (USC) for the week was 52.
She paid 30 into her VHI plan and 23 into a savings plan.

Calculations:
Basic =
Overtime =
Date:
Pay
Basic
Overtime
Gross Pay

Name:
Deductions
PAYE
PRSI (USC)
VHI
Savings Plan
Total Deductions

Week #

Net Pay

Questions

CH 1

Income

1. What is income?
2. Name and explain the two types of income and illustrate your answer with examples.
3. Define the term Benefit in Kind and give three examples to illustrate your answer.
4. What is the difference between an official and unofficial perk? Use an example to
illustrate your answer.
5. Explain what is meant by the term gross pay.
6. Explain what is meant by the term net pay.
7. Name two Statutory Deductions and name two Non Statutory or Voluntary Deductions.
8. How does a person benefit from paying PRSI?
9. Explain what is meant by (a) PAYE and (b) PRSI
10. Complete payslips for each of the following:
a) Shane Tracey: basic pay 160, overtime 20, PAYE 8, PRSI 3, Union Dues 3,
VHI 10, Pension 15.
b) Linda Tierney: basic pay 330, overtime 50, PAYE 47, PRSI 16, union dues
5 and Vivas 20.
NAME

NAME

GROSS PAY
Basic O/Time
Total

PAYE

GROSS PAY
Basic O/Time
Total PAYE

DEDUCTIONS
PRSI Union VHI Total

DEDUCTIONS
PRSI Union Vivas Total

NET PAY

NET PAY