Oct 2014
18
Illness Benefit
Illness benefit is liable to PAYE but not USC and PRSI. A lot of confusion arises on the employers’ role of the taxation of the benefit. If an employee is out sick for more than 6 days they can claim illness benefit from the Department of Social Protection (DSP). There are a couple of scenarios that will arise when this happens:
• You will receive a letter from the DSP stating that they are receiving a cheque for Illness Benefit and advising you on the amount liable to PAYE
• You must reduce the pay by the amount stated by the DSP in the weekly/monthly basic and input the Illness Benefit in the correct section on the payroll
• You haven’t had any correspondence with the employee, in this case you must assume they are in receipt of the benefit and tax them. The daily rate is €31.33 and the weekly 6 day benefit is €188.
• If the employee has opted for the employer to receive the cheque it still needs to be taxed in the Illness Benefit section on the payroll.
• If it is your company's policy to pay an employee while out sick you must reduce the weekly/monthly pay by the amount of Illness Benefit they are receiving.
• If is not your companies policy to pay an employee while out sick their pay must then be zeroised.
• If the employee returns and you’ve inputted the benefit into the system and they weren’t receiving the benefit , simply go to the illness benefit section and put a “–“ figure of the amount you deducted. This will refund any tax deducted, i.e. -€188
Oct 2014
15
Oct 2014
12
Irish Employers Save 57% on Staff Rewards this Christmas!
Employers can save up to 57% on staff rewards by taking advantage of the Government Small Benefits Exemption Scheme.
To qualify for the tax exemption only one non cash bonus to a maximum of €250 may be paid to each employee in any tax year. It is often called the Christmas bonus scheme due to the fact that it is usually paid at Christmas time. Employers should be warned that if the value of the non cash benefit exceeds the limit of €250 then the full value of the benefit will be subject to PAYE, PRSI and USC.
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.
Jul 2014
11
Under 3 months to go to e-Day
The 19th of September 2014 is e-Day, the date from which Government Departments, Local Authorities and State Agencies will no longer use cheques in their dealings with businesses. e-Day was launched in September 2013, 12 months before it takes effect, to ensure a smooth transition to the new arrangements and to give both the various public sector bodies and affected businesses plenty of time to make arrangements for paying electronically.
Ireland is one of only a few EU Member States that still makes use of cheques as a regular payment method. The particular focus of e-Day is to encourage SMEs to migrate from cheque usage, as they are either issuers or receivers of more than 60% of all cheques in Ireland. It is hoped that moving from cheques to electronic payments will result in reduced costs and improved cash-flow for the overall business sector.
Businesses that currently pay public bodies by cheque will therefore need to check with them what alternative options will be accepted. Electronic Funds Transfer (EFT), Direct Debit and Payment Card options are among the alternatives that will be offered by Government Departments, State Agencies and Local Authorities.
Jul 2014
10
Local Property Tax (LPT) - Reminder for Employers
Property owners in employment or in receipt of an occupational pension can opt to pay their LPT through deduction at source from salary or pensions. In addition, where property owners fail to pay their LPT, Revenue may instruct their employer/pension provider to deduct the payment at source. The same form or instruction issues to the employer/pension provider whether it is a “voluntary” or “mandatory” instruction.
Revenue are writing to employers who appear to have outstanding LPT liabilities on record for the 2013 tax year. Revenue will demand payment as provided under Section 960E (2) of the Taxes Consolidation Act 1997. The demand will be followed up with debt recovery/enforcement action as necessary. This may include interest, which will be calculated from the due date up to the actual date payment is received. Penalties may also be imposed for failure to deduct and pay over the LPT as instructed.
Where an Employer’s Tax Credit Certificate (P2C) was received for an employee for the 2013 tax year with LPT liability but the employer failed to account for the LPT, they should immediately file an amended P35 and P35L and pay any balance outstanding.
For the 2014 tax year instructions are continuing to issue in relation to LPT for 2014 and arrears of Household Charge (HHC). Employers/pension providers who receive a P2C instruction should implement it immediately.
Where an employer/pension provider does not deduct the LPT as instructed, the employer/pension provider becomes liable for the amount due. Non-operation of the instruction may result in interest charges, penalties, refusal of a tax clearance cert and increases the chances of a tax audit.
Jun 2014
17
Thesaurus Gets Moving!
A physically active workforce makes so much sense. Research has proven that employees who are physically active have increased productivity, reduced injuries, reduced stress and take less sick days. It’s believed that physical activity reduces absenteeism by up to 20%.
Most employees spend eight hours a day at work, many sitting behind desks, driving or standing at workstations. Considering this, and the increasing rates of obesity in Ireland, it is extremely likely that many employees are not getting sufficient exercise to benefit their health.
Considering all of the above, employers are well advised to promote health and wellbeing in the workplace. There are a number of initiatives that employers can take to promote health and wellbeing, some of which include:
• Providing Health Screening e.g. blood pressure and cholesterol
• Providing healthy eating options in the canteen
• Encouraging employees to be active during their breaks
• Supporting employees to take a fitness class or join a gym
In Thesaurus we’re all office based and spend most of our days sitting behind our desks. In an effort to get our team moving and increase physical activity, we recently completed the Irish Heart Foundation Step Challenge.
We broke into teams and using pedometers counted our daily steps over a four week period. At the end of each week the teams totalled their steps, the totals were then logged on what soon became a very competitive scoreboard! The challenge was to walk at least 10,000 steps per day, some were more successful than others, but everyone got involved and everyone had fun!
The Irish Heart Foundation provided us with all the support material needed to get us up and running/walking. Any workplace looking to create awareness around a healthy lifestyle and looking to have some fun, should consider the Step Challenge. Further details can be found at www.irishheart.ie
