Definition

The PAYE P21 form is a document issued by the Revenue Commissioners in Ireland to employees who are subject to pay as you earn (PAYE) taxation. 

What is a PAYE P21 form?

The PAYE P21 form serves several purposes and provides important information regarding an individual’s tax affairs for a specific tax year. Here are some key aspects of the PAYE P21 form:

• Tax calculation: The P21 form summarises an individual’s yearly income, deductions, and contributions, calculating total tax paid to determine if there’s an overpayment or underpayment.
• Tax refunds: If the P21 form shows that the individual has overpaid tax, the Revenue Commissioners will issue a tax refund to the individual. The P21 form indicates the amount of the refund owed and provides instructions on how to claim it.
• Tax balancing: If the P21 form shows that the individual has underpaid tax, the Revenue Commissioners will calculate the additional tax owed. This may result in the individual having to make a tax payment to settle any outstanding balance.
• Employment details: The P21 form typically includes details of the individual’s employment, as well as information about any other sources of income they may have.
• Tax credits and allowances: The P21 form may detail the individual’s tax credits and allowances, deductions authorised by tax authorities to adjust the tax owed, ensuring accurate taxation tailored to personal circumstances.

Example of a PAYE P21 form

A PAYE P21 form might show that an individual earned €30,000 in a tax year, had €5,000 in allowable deductions, paid €4,000 in tax through payroll deductions, and is entitled to a €500 tax credit. Based on this information, the form would indicate whether the individual is due a tax refund or has an outstanding tax balance.