How do I calculate the IRRF on my employees’ payroll?

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How do I calculate the IRRF on my employees' payroll?

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IRRF is the acronym for Withholding Income Tax and represents an anticipation of the payment of the income tax charged by the Federal Revenue on the salaries of workers with a formal contract. It is mandatory and the discount is made monthly directly from the worker's salary.

Once the company calculates the IRRF, employees do not have to worry about collecting their contribution monthly. Thus, even before making the payment, the employer himself subtracts the amount and sends it to the IRS based on the salary of each employee.

The organization should always use the IR tax rate table as a reference, which contains the amount corresponding to the amount that each employee must pay in tax, which is proportional to the size of their monthly income.

It is important to highlight that the responsibility for carrying out the correct retention rests with the company. For this reason, it is essential to count on the help of a accounting sector to ensure that payroll calculations and discounts are made without error.

And your company, already know how to calculate the IRRF correctly? Check out everything you need to know to make the collection effectively:

Before you continue reading, we have golden tips for you to prevent your company from getting fines! Answer the form and receive them:

What is Income Tax?

First, before making the calculation, it is necessary to fully understand what income tax means.

Income tax (IR) it exists in several countries and is nothing more than the deduction of a portion of the average annual income of salaried professionals that is passed on to the government.

The portion charged may vary according to the average income of the professional or be fixed. This will depend on the tax regime in question. In the UK, it is paid monthly and, in the following year, the taxpayer makes the statement of income tax for annual adjustments of how much or how much has to be refunded for amounts paid in excess.

Income tax withheld at source is a tax obligation defined by law and is the company's responsibility. Retention must come at payslip monthly of employees hired under the CLT regime.

How to make the sum of the employees' salaries?

Maturities are the amounts that add up to gross remuneration, which will be the basis for the discounts made.

So, before calculating the IRRF, it is necessary to have in hand the amount of the employees' gross salary. To do this, all you have to do is add up all the employee's wages. This value will be the basis for calculating all payroll discounts.

It is also necessary to check all the salaries that the employee may have, such as a nightly bonus, overtime, weekly paid rest, between others.

EHIC

From the sum of the wages, it is possible to have the basis for making the discount of the social security contribution.

The discount is made monthly on all employee salaries. Its percentage varies according to the employee's earnings and also according to the values ​​released by the EHIC at the beginning of each beginning of the year.

This payment is made in the reference month and the transfer of the company to the EHIC takes place until the 15th of the following month.

The rates can vary between 8% and 11%, reaching the limit of R $ 604.44. The contribution ranges are:

  • Gross salary up to R $ 1,659.38 – 8% of EHIC;
  • Gross salary from R $ 1,659.39 to R $ 2,765.66 – 9% EHIC;
  • Gross salary from R $ 2,765.67 to R $ 5,531.31 – 11% of EHIC;
  • From R $ 5,531.32 – R $ 604.44 of EHIC.

How to calculate IRRF?

The basis for income tax withheld at source is the same used for the calculation of the EHIC, subtracting the amount of the social security contribution. In other words, an employee with a gross salary of R $ 3,200, in which his EHIC discount is R $ 352 (11%), will have a basis for calculating the IRRF of R $ 2,848;

In addition to discounting the amount related to the EHIC, it is necessary to subtract the amount of R $ 189.59 from the result for each legal dependent that the employee may have. These dependents can be: spouse, children up to 21 years old, parents and grandparents (as long as they do not earn an income).

Therefore, to assist your company, it is necessary to emphasize the importance of reaching the correct value for the calculation basis. To do this, remember to follow the three fundamental steps:

Step by step to calculate IRRF

  1. First, remember to check the total gross salary of employees;
  2. Subtract the portion referring to the EHIC discount from the gross amount;
  3. Remove the amount related to the number of dependents from the remaining amount;
  4. Subtract from the remaining amount the amount paid for alimony, in cases of court decision;
  5. Subtract from the amount the amount paid in private pension;
  6. Finally, after all deductions (EHIC, dependents, alimony and private pension), it is possible to arrive at the base value to calculate the IRRF;
  7. Then, it is necessary to consult the table of the monthly income tax to know which range the base value of each employee fits and which rate must be paid. The income tax rate is progressive. To see the updated values, it is necessary to access the IRS website;
  8. After verifying the values ​​of the IR in exercise in the year, the rate on the base value must be applied;
  9. After that, subtract the portion to be deducted from the amount found;
  10. Finally, the calculation of the IRRF will be ready. The amount found will refer to the amount of the income tax discount retained on the payroll monthly.

In order not to forget any of the steps listed above, your company can use the following formula:

IRRF calculation: {[Total de vencimentos – Deduções (EHIC, dependentes, pensão alimentícia, previdência privada)] x Rate} – Portion to be deducted.

Check an example to base it on:

Example

A certain employee receives a gross salary of R $ 3 thousand. This amount is levied at the rate of 11% of the EHIC, which will give R $ 330. Resulting in a base of R $ 2,670.

To arrive at the amount of the monthly income tax discount on your payroll, it is necessary to raise the following questions: does he have dependents? do you pay child support? Do you have private pension or other deductions?

Let's consider that this professional has a legal dependent and pays child support in the amount of R $ 200. With these deductions, the basis for the calculation is now R $ 2,280.41.

From the real income tax base, it is possible to identify the percentage range to be discounted.

At tracks updated for 2018 they are:

Calculation basis (R $) – Rate (%) – Portion to be deducted from the IRPF (R $)

Up to 1,903.98 – exempt – exempt

From 1,903.99 to 2,826.65 – 7.5% – R $ 142.80

From 2,826.66 to 3,751.05 – 15% – R $ 354.80

From 3,751.06 to 4,664.68 – 22.5% – R $ 636.13

Above 4,664.68 – 27.5% – R $ 869.36

Thus, to arrive at the value of the employee of our example, we should perform the account:

  • R $ 2,280.41 x 7.5% = R $ 171.03;
  • R $ 171.03 – R $ 142.80 = R $ 28.23 of withholding tax.

Does the IRRF apply to holidays and the 13th salary?

It is important to know that the income tax must also be discounted in the vacation payments of employees and in their 13th salary. The amounts to be discounted from the pension plan are calculated monthly, therefore, the rates are applied separately.

Therefore, to calculate the IRRF on vacations, it is necessary to take as a base the total to be paid to the employee, deducting the allowable discounts and applying the updated income tax table.

For the 13th salary, in which the amount to be paid is divided into two installments, the IRRF discount must occur only in the second installment of the payment. In this case, the income tax is calculated on the value of the 13th gross, taking into account all legal deductions referring to the employee.

As you can see, calculating IRRF is not an easy task. Therefore, the company must have an efficient team in its accounting sector. Only then will it be possible to ensure that the payroll discounts are made correctly and that the company does not have any legal problems afterwards.

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