Sep 2014
24
e-Day has come and gone - 5 practical tips!
The government, its departments and agencies no longer issue cheques to or accept cheques from businesses. From a business perspective this has an impact on payments to government such as VAT payments and any employer deductions to payroll made at source.
Here are five practical tips published by the Irish Independent to assist businesses in being ready for life without cheques:
1.Review your historic payments to government or its agencies in order to understand the typical value of these payments, how often they are paid, and identify the date the next payment is due in order to understand what impact this will have on cashflow.
2. If these payments were previously made by cheque, you will need to find out the recipient’s payment details including BIC / IBAN, in order to make a successful payment on time to avoid late payment penalties.
3. Understand your current processes for making payments to identify which have to change, and ensure that you are aware of the SEPA regulations on timelines for submission of electronic payments. If pay-runs currently happen at a particular time of the week or month, these may need to change in order to fulfil the requirements under SEPA.
4. Recognise that e-Day is simply the next step under the National Payments Plan that will fundamentally change the way that businesses manage payments as the market shifts from cash and cheque to electronic formats. You will need to ensure efficient cash flow management and enable faster payments into your business by facilitating your customers to pay you electronically or offer card payments
5. Whilst e-Day might necessitate process change in your business which is typically uncomfortable and time consuming, it is important to bear in mind that cheque payments typically carry longer clearing times, are more costly and lead to longer delays in getting paid as a business.
Sep 2014
22
Irish Employers - show your staff your appreciation!
Have you employees with 20 plus years of service? If so why not say thank you with a gift.
Revenue Commissioners offer tax relief on long service awards, which is considered to be at least 20 years of service. Tax relief on long service awards can be in addition to the small benefit exemption.
Employers can reward employees for long service with tangible articles with a value up to a maximum of €50 per year of service, starting at 20 years of service and every 5 years thereafter.
20 years of service – value up to €1,000
25 years of service – value up to €1,250
30 years of service – value up to €1,500
35 years of service – value up to €1,750
The award must be a tangible article e.g. a gold watch, it does not apply to awards made in cash.
Tax will not be charged provided:
• The cost to the employer does not exceed €50 per year of service
• The award is made in respect of service not less than 20 years
• No similar award has been made to the recipient within the previous 5 years
Where any of the conditions are not met PAYE, PRSI & USC must be applied on the full amount.
This concession applies to directors as well as employees.
Full details can be found on Revenue’s website www.revenue.ie
Sep 2014
12
Irish Employers - Lump Sum Payments that qualify for tax relief
The following redundancy and retirement payments, although not completely tax exempt; do qualify for some relief.
• Wages / Salary in lieu of notice on retirement or redundancy.
• Payment paid by your employer which is additional to the statutory redundancy payment. This additional payment is known as an ex-gratia payment or golden handshake and is up to certain statutory limits.
If your employer provides all or part of the lump sum in another form e.g. car, holiday, etc. the cash value of this item is taxable.
If this lump sum is on the termination of a contract this payment is chargeable to tax in the normal way.
If an employer pays for the cost of retraining an employee as part of a redundancy package, up to €5000 of the retraining cost is exempt from tax. The following conditions apply:
• The employee has more than 2 years continuous full time service
• The retraining is completed within 6 months of the redundancy
• The retraining is designed to improve skills/knowledge to assist in obtaining employment or setting up a business
• The employee cannot take cash instead and must avail of the retraining.
The tax exemption will not apply to dependents, spouse or civil partner of the employer.
To keep up with the latest payroll news, check out our new Bright website. There, you'll be able to register for any of our upcoming payroll webinars and download our payroll guides.
Sep 2014
8
Updated Revenue Material
Revenue have recently updated the following payroll-related forms, leaflets and manuals on their website:
Form 12A
· A Form 12A is an application for a Tax Credit and Universal Social Charge Certificate. This form must be completed by people who are commencing work in Ireland for the first time. The updated version has replaced the One Parent Family Tax Credit with the Single Person Child Carer Tax Credit.
Leaflet IT45
· This leaflet provides information on Income Tax, Capital Gains Tax and Capital Acquisitions Tax for over 65s. It also includes other general information on PRSI and USC.
Leaflet IT3
· This leaflet explains the procedures that a separated person should take to notify Revenue of the breakdown of a marriage, civil partnership or cohabitating relationship and also explains what tax credits and reliefs that the individual may be entitled to following the breakdown of the relationship.
Consolidated USC Manual
The manual includes specific sections on the following payroll-related topics:
· Benefits in Kind
· Medical Cards
· Redundancy Payments
Local Property Tax (LPT) Manual
This has now been updated to include the following points:
Arrears of the Household Charge which were outstanding on 1st July 2013 were replaced with a €200 LPT charge. Properties that have a significant level of pyrite damage are exempt from the charge to LPT. The update clarifies that the pyrite exemption also applies to the €200 Household Charge liability.
· A new instruction has been added which explains how LPT appeals are dealt with.
