What is Emergency Tax and How Does it Work? A Guide for Employers and Employees

Emergency tax is one of the most common payroll headaches in Ireland, but it doesn’t have to be. 

Emergency tax is a temporary tax rate applied by Revenue when an employer does not have the correct tax details for an employee. This usually happens when a new employee starts a new job, and their PPSN (Personal Public Service Number) or Revenue Payroll Notification (RPN) hasn’t been provided or processed yet. Without these details, the payroll system cannot apply the correct tax credits and standard rates, so emergency tax is used as a safeguard to ensure compliance. 

 Emergency tax typically results in higher deductions from an employee’s pay because no tax credits or standard rate cut-off points are applied. The good news? It’s not permanent. Once the correct information is submitted to Revenue and the employer updates their payroll system, the employee’s tax will be recalculated, and any overpaid tax can be refunded. Emergency tax can be a real hindrance to both employers and employees in the early stages of a new job, adding pressure to employees already handling changes to their work life.  

Revenue applies emergency tax as a safeguard when an employer does not have the correct tax details for an employee. This typically happens in three main situations: 

1. Lack of PPSN (Personal Public Service Number): 
   Without a PPSN, Revenue cannot identify the employee’s tax record, so no tax credits or standard rate cut-off points can be applied.
2. Missing Tax Credits: 
   If the employer does not have the employee’s tax credits or standard rate band information, the payroll system cannot calculate the correct deductions.
3. No RPN (Revenue Payroll Notification): 
   Employers are required to request an RPN via their payroll software from Revenue for every employee. If this isn’t available or hasn’t been processed, emergency tax is applied until the correct details are received. 

Emergency tax ensures compliance and prevents underpayment of tax while the correct information is being gathered. Once the employer submits the necessary details and updates payroll, the employee’s tax position is corrected, and any overpaid tax can be refunded. 

Emergency tax applies when Revenue does not yet have enough information to allocate an employee’s tax credits and standard rate cut-off point. In this situation, no tax credits apply and income is taxed at 20% on a limited amount, with the balance taxed at 40%. For example, on earnings of €700 per week, an employee could pay around €200 in PAYE under emergency tax compared to roughly €70–€90 under normal taxation, significantly reducing take-home pay until the issue is corrected. 

For employers, emergency tax creates extra administrative work. Payroll teams must manage corrections, update systems, and handle employee queries. Delays can lead to dissatisfaction and damage trust. 

For employees, the impact is immediate: reduced take-home pay and potential financial strain. Many workers rely on accurate wages to cover bills, so unexpected deductions can cause stress. Quick resolution is critical to maintain morale and avoid unnecessary hardship. 

See also: Payroll Risks on the Rise

Resolving emergency tax is straightforward when both employer and employee act quickly. 

Employers should: 

• Collect the employee’s PPSN and personal details promptly.
• Request and apply the RPN (Revenue Payroll Notification) through payroll software.
• Update payroll systems to reflect the correct tax credits and bands. 

Employees should: 

• Register with Revenue and ensure their details are correct.
• Provide their PPSN and any required information to their employer.
• Once Revenue processes the RPN, emergency tax is removed, and any overpaid tax can be refunded, usually within the next payroll cycle.