Various tax changes arising from the Budget, along with an increase in the national minimum wage and revised mileage and subsistence rates, are set to impact payroll. GroForth’s Nikki Johns summarises these recent developments.
BUDGET / FINANCE BILL
Finance Bill 2022 is currently making its way through the Oireachtas. This Bill implements measures announced on Budget Day. The key changes to be aware of include:
- Personal Tax Credits, including the self-employed Earned Income Credit, are being increased by €75 to €1,775 from 1 January 2023.
- Standard cut-off point: The standard rate cut-off point for a single person is being increased by €3,200 to €40,000, with commensurate increases in the bands applying to married persons and persons in civil partnerships.
- Home carer tax credit: This is being increased by €100 to €1,700.
Universal Social Charge
The 2% rate band ceiling is being increased by €1,625 to €22,920 to take account of the National Minimum Wage increase that will apply from 1 January 2023.
Rent Tax Credit
A new €500 tax credit is being introduced for renters who do not receive State housing supports. The credit will also be available in certain circumstances to parents who pay rent on behalf of their student child who is in third-level education.
Small Benefit Exemption
The Small Benefit exemption (which some companies use to gift vouchers to their staff and directors at Christmas) is being increased to €1,000 and number of permissible benefits is increasing from one to two.
Cycle to work scheme
The threshold for cargo bikes under the cycle to work scheme is being increased to €3,000 with effect from from 1 January 2023.
Special Assignee Relief Programme
This relief is being extended up to 31 December 2025. For new entrants, the income threshold to avail of the scheme is being increased from €75,000 to €100,000.
Key Employee Engagement Programme
Changes to enhance this relief are to be introduced when the Finance Bill reaches Committee Stage.
OTHER RECENT DEVELOPMENTS
A number of other recent developments will also affect payroll in some companies. These include an increase in the national minimum wage and revised mileage and subsistence rates.
The National Minimum Wage is being increased to €11.30 per hour from 1 January 2023.
Revised civil service mileage and overnight subsistence rates (effective from 1 September 2022) were recently published by Revenue. Domestic day subsistence rates are unchanged.
The transition from 2022 to 2023 means that you will need to obtain new Revenue Payroll Notifications (RPNs). These will be available from Revenue in early December. It is important not to use 2022 RPNs for payments made in 2023.
Payroll operators also need to prepare for the introduction of statutory sick pay which is due to come into effect on 1 January 2023.
Pensions auto enrolment is also expected to come into effect next year.
As always, if you are a GroForth client and are concerned about how any of the measures mentioned in this article affect your business, our team is on hand to help. During busy periods, the best way to contact us is by email.