As the 2022 tax year draws to a close, many companies are now considering any payroll reporting items that may need to be actioned before year end, while also preparing for their obligations in 2023.

We have outlined below a few items that employers may wish to consider:

1. Finance Bill changes on vouchers to staff

Following October’s Budget, the recent Finance Bill announced the extension of the Small Benefits Exemption to allow for up to two vouchers/benefits to be provided tax-free each year, with an increase in the annual exemption from €500 to €1,000 in aggregate. Employers may wish to consider whether they want to take advantage of an additional opportunity to reward staff, in a tax efficient manner, before Christmas.

2. PAYE Settlement Agreement (PSA)

Applications to account for tax on minor and irregular non-cash benefits outside of payroll via a PSA for 2022 must be made to Revenue, in writing, by 31 December 2022. The due date for the submission of the PSA and the payment of the income tax liability on the benefits, which will be based on the grossed-up benefit amount, is 23rd January 2023. Timely submission of the PSA along with payment of the income tax liability will need to be completed on or before the due date to avoid interest and penalties.

3. Payroll Self-Corrections

In September 2022 Revenue published a new Tax and Duty Manual “Revenue Compliance Interventions – Operation of Payroll Taxes (Income Tax, PRSI, USC) by Employers”, which will apply to any self-correction or qualifying disclosure received and/or Revenue compliance intervention initiated following it’s publication.

In this Tax and Duty Manual, Revenue have clarified the position where corrections are identified relating to the current year and where corrections are identified relating to the prior year.

For current year corrections, these can be made in the next payroll run without formal notification to Revenue and without the application of statutory interest or tax geared penalties.

For prior year corrections, these can be made up to the due date of the corporation tax return for the year in question (i.e. if the company has a 31 December 2022 accounting year end then the payroll self-correction can be made up to 23 September 2023). To avail of this extension the employer must formally notify Revenue of the self-correction in writing and calculate statutory interest from the date the liability should have been paid up to the date the liability is actually paid. Tax geared penalties will not apply provided Revenue have not already opened an intervention for the year in question.

There is an opportunity for employers, prior to year-end, to identify any current year corrections required for inclusion in the December payroll submission, or to avail of the formal self-correction mechanism for 2022 before the corporation tax due date expires.

4. Preparation for Changes in 2023

Several changes come into effect from 1 January 2023 that will impact employers. Such changes include:

• Increases in tax credits and standard rate cut off points for income tax purposes and increases in standard rate cut off points for USC purposes. Employers should ensure that they are using the most up to date RPN to take account of these changes.
• Changes to the calculation of benefit in kind (BIK) on company cars, with the BIK being calculated with reference to CO2 emissions. These changes will take effect for 2023 and subsequent years. It should be noted that the new rules will apply to all cars (including electric vehicles), whether the car is acquired in 2023 or was made available to employees in earlier years of assessment. From 2023 onwards, the BIK cash equivalent on the use of an employer provided car will be determined based on both the business mileage undertaken and the vehicle’s CO2 emissions.
• For the year of assessment 2023 and onwards the cash equivalent for vans will increase from 5% to 8% of the Original Market Value (OMV).
• As announced in the Budget the Special Assignee Relief Programme has been extended to 31 December 2025. An individual who arrives in Ireland in the years 2023 to 2025 will be required to have a basic salary of at least €100,000 in order to qualify for SARP. The Finance Bill added some additional requirements to qualify for the relief, including that the employee needs to have a PPSN and registered their employment with Revenue. The employer is required to certify within 90 days of the individual’s arrival to Ireland that the employee has complied with the conditions including the PPSN requirement in order to qualify for SARP. Given current delays being encountered in obtaining a PPSN, it is advisable that employers encourage employees to commence their applications as soon as possible upon arrival as eligibility for the relief is at risk if there is a delay.

If you wish to discuss any of the items above in more details, please reach out to a member of the team.