Budget 2015 - How it impacts on your payroll

3 November 2014

Issues like the budget can have a substantial impact on payroll. Here are some of the highlights from the October 2014 budget in relation to payroll. We hope you find this information both informative and useful.

Issues like the budget can have a substantial impact on payroll. Here are some of the highlights from the October 2014 budget in relation to payroll. We hope you find this information both informative and useful.

TAX RATES, SRCOP PERSONAL TAX CREDITS

Higher Rate of Income Tax is being reduced from 41% to 40%.
Tax Rate Band is being increased by ?1,000.00.

Single individual: Increase in the standard rate from ?32,800 to ?33,800.
Married one-income Couple: ?41,800 to ?42,800.

The only change in relation to tax credits is the introduction of the new relief for water charges.

Water Charges Relief

Income Tax relief at the standard rate will apply in respect of water charges up to a maximum of ?500.00 per household per year. At the current standard Income Tax rate of 20% the relief will be worth up to a maximum of ?100.00 per household per annum.

The claim for the water charges relief will be made in the year following the tax year in which the payment is made.

UNIVERSAL SOCIAL CHARGES (USC)

Incomes of less than ?12,012 are exempt from USC.

For incomes of greater than ?12,012, USC should be applied at the following rates and bands:

  • ?0 to ?12,012 @ 1.5%
  • ?12,013 to ?17,576 @ 3.5%
  • ?17,577 to ?70,044 @ 7%
  • ?70,044 and above @ 8%
  • Balance @ 8%

Self-employed income over ?100,000.00 @ 11%.

Reduced rates apply to people aged 70 and over whose aggregate income is ?60,000 or less, and to medical card holders whose aggregate income does not exceed ?60,000 will pay a maximum rate of 3.5% rate USC.

Emergency Basis for USC Deduction is 8%.

PRSI Changes

There are no changes to the PRSI rates and bands for 2015.

Pension Contributions

Employee pension contributions will continue to qualify for tax relief at the employee’s marginal rate of tax. There has been no change to the annual earnings ceiling of ?115,000 upon which tax relief can be claimed.

Maternity and Adoptive Benefit

The Maternity / Adoptive Benefit will remain at ?230 for 2015.

Illness Benefit

The number of 'waiting days' for Illness Benefit will remain at 6 days, i.e. individuals will not be entitled to Illness Benefit for the first 6 days of any period of incapacity for work.

Rent a Room Scheme

The threshold for exempt income is being increased to ?12,000.00 per annum.

Artists Exemption

The threshold will be increased by ?10,000.00 to ?50,000.00. The exemption is also being extended to non-resident artists (people who are resident or ordinarily resident in another EEA State).

Seed Capital Scheme

This is being re-branded as "Start-Up Relief for Entrepreneurs" (SURE) and being extended to individuals who have been unemployed up to 2 years.

Home Renovation Incentive (HRI)

The Home Renovation Incentive is being extended to include rental properties owned by landlords subject to income tax.

Rent Tax Relief

This will continue to be reduced, as announced in Budget 2011.

EMPLOYMENT AND BUSINESS

The Employment and Investment Incentive is being amended to:
Increase the amount of finance that can be raised by a company to ?5 million annually subject to a lifetime maximum of ?15 million.

Allow investment in the management and operation of nursing homes, medium-sized enterprises in non-assisted areas, and internationally traded financial services certified by Enterprise Ireland, to qualify under the scheme.
Increase the required holding period for shares from 3 to 4 years and extend the inclusion of hotels, guest houses and self-catering accommodation in the scheme by a further 3 years.

These changes are subject to the approval of the European Commission.

ACCELERATED CAPITAL ALLOWANCES

Accelerated Capital Allowances for Energy Efficient Equipment is a measure to incentivise companies to invest in energy efficient equipment. This was due to expire at the end of 2014 and is being extended to the end of 2017.

The Special Assignee Relief Programme is being extended for a further 3 years until the end of 2017. In addition the:

  • Upper salary threshold is being removed
  • Residency requirement is to only require Irish residency
  • The exclusion of work abroad is also removed
  • Requirement to have been employed abroad by the employer is being reduced to 6 months

The Foreign Earnings Deduction is being extended for 3 years until the end of 2017. In addition:

  • The list of countries eligible is being extended to include Mexico, Chile and certain countries in the Middle East and Asia;
  • The number of days that employees are required to be abroad in a year is being reduced to 40 days
  • Travel time will be included as time spent in a country to make it easier for smaller companies to send employees on trade missions and the minimum stay in a country is reduced to 3 days.

Ceridian Ireland has a dedicated Paycentre in Limerick that looks after the managed payroll services for all our Irish clients. Our team of payroll professionals are all IPASS trained and have a huge breath of experience in payroll.

We would encourage anyone who needs advise or support on their payroll to give us a call on 1890 729 765 to see if we can help you transition to a +99% payroll accuracy rate with improved efficiencies in your current procedures.