Frequently Asked Questions. for Employers & Pension Providers

Transcription

1 Frequently Asked Questions for Employers & Pension Providers 17 June 2014

2 These FAQs have been updated on 17 June The changes from the previous version (published on 11 September 2013) are listed hereunder. New FAQs FAQ Subject Change 2.9 Where is the LPT element shown on the ROS P2C file? New FAQ 2

3 Contents 1. General When will employers/pension providers start deducting Local Property Tax (LPT) from employees /pensioners salaries/pensions? Will the LPT be shown on employees Tax Credit Certificates (TCCs)? An employee/pensioner, whose P2C does not contain an amount for LPT, asks their employer/pension provider to deduct LPT from their pay/pension. What is the employer/pension provider to do? Who is responsible for refunding overpayments of LPT? Can an individual who opts to have LPT deducted from their wages/ occupational pension arrange to have the payments deducted in uneven amounts to suit their personal circumstances? What revisions to forms will be made to cater for LPT? What priority will be applied to deduction of LPT in payroll? An individual asks their employer to stop deducting LPT from their salary. What is the employer to do? An employee/pensioner disagrees with the figure of LPT stated on the P2C. What is the employer/pension provider to do? Should LPT deductions be shown on employees /pensioners payslips? Is a refund of Pension Related Deductions (PRD) regarded as emoluments for the purpose of deducting LPT? Is an employer permitted to deduct LPT from an amount of expenses paid to an employee? Where LPT is not deducted due to the employee being off payroll for a period of time or where there is a shortfall in the LPT deducted in a pay period (employee has insufficient income to meet the LPT deduction), is the employer required to notify the shortfall to Revenue? What are the obligations of property owners? Employer Tax Credit Certificate P2C How will employers/pension providers know when they have to deduct LPT from an employee s/pensioner s salary/pension? When are P2Cs, incorporating LPT, due to issue to employers/pension providers?

4 2.3 How is LPT information shown on the paper version of employer Tax Credit Certificates (P2Cs)? The new P2Cs, incorporating LPT, will issue in June As an employer/pension provider, will I receive P2Cs for all employees/pensioners in June or just for the employees/pensioners who will have LPT deducted at source from their salary/pension? The P2C will show the amount of LPT to be deducted in the employment to 31 December. The employer will break this figure down into the number of pay days occurring. What is the rule regarding rounding of figures? The basis of deduction (cumulative or week 1/month 1) is stated on the P2C will this affect the deduction of LPT? P2Cs incorporating the new LPT field will issue to employers/pension providers in June 2013 for LPT deductions commencing from 1 July Will these P2Cs contain the normal P2C tax and USC information? An employee has a second live employment with the same employer at the same time. How will the employer know how to deduct LPT? Where is the LPT element shown on the ROS P2C file? LPT deduction in payroll How is the figure of LPT shown on the P2C to be applied in payroll? In mid June I received a P2C for a monthly-paid pensioner showing an amount of LPT to be deducted from 1 July However, I have already run the July payroll. What am I to do? An employee who has ceased employment is due arrears of pay. The P2C in place at the date of cessation advised an amount for LPT. Do I deduct LPT from the arrears payment? How will Revenue notify employers/pension providers to stop deducting LPT from an employee s/pensioner provider s salary/pension? An individual has two periods of employment with the same employer in the year. What figures of LPT are to be returned on forms P45, P60 and P35L? What is the employer to do when a new employee gives them a P45 showing an amount for LPT deducted? On 1 October 2013, I received a revised P2C for an employee showing a reduced figure of LPT. How do I apply this in payroll?

5 3.8 On 1 December 2013, I received a revised P2C for a pensioner showing an increased figure of LPT. However, I have already run my December 2013 payroll. What am I to do? What is an employer/pension provider to do if he/she receives a revised P2C showing the same amount of LPT that was advised on the previous P2C? Can an employee s/pensioner s LPT deduction at source from salary/pension stop and then recommence at a later stage in the same year? I am an employer and have discovered that I have been over deducting LPT from an employee. What am I to do? Revenue provides an electronic Tax Deduction Card (etdc) at Has this etdc been revised to accommodate LPT? How is LPT to be deducted in a year where there is an extra pay period week 53, fortnight 27, etc? What is an employer to do when an employee has insufficient net pay in a pay period to pay their LPT? How is LPT to be deducted where an employee has an irregular pay pattern, the pay frequency not known in advance? A four-weekly paid employee is leaving employment having worked only one week in their last pay period. Should their LPT deduction be apportioned on this last pay day? How are Supplementary/Bonus payroll runs to be treated for LPT deductions? An individual has two periods of employment with the same employer in the year, the second period of employment ceasing before 31 December. What figures of LPT are to be returned on forms P45 and P35L? Absence from work holiday pay, sick leave, etc How is LPT applied to holiday pay paid in advance of the usual pay day? A four-weekly paid employee is receiving holiday pay paid in advance in respect of two weeks holidays. How is LPT deducted in this case? Under the Shorter Working Year Scheme an employee is absent on special unpaid leave for a 4-week period in Summer How will LPT be deducted in this situation?

6 4.4 Where employees, who have opted for LPT deduction from wages, are absent from work on sick leave or maternity leave throughout the year, how will LPT be deducted? Where an employee is off pay and is due a refund of PAYE and/or USC in cumulative payroll, is the LPT to be deducted before any refund of PAYE/USC is issued? An employee who has opted to have LPT deducted from their wages is due to go on maternity leave from 1 November The employee will not be paid while out on maternity leave and has asked their employer to deduct the full amount of outstanding LPT before they depart. Can the employer do this?

7 1. General 1.1 When will employers/pension providers start deducting Local Property Tax (LPT) from employees /pensioners salaries/pensions? Deductions at source from salaries and pensions will start from 1 July Will the LPT be shown on employees Tax Credit Certificates (TCCs)? No. LPT will not be shown on employees Tax Credit Certificates An employee/pensioner, whose P2C does not contain an amount for LPT, asks their employer/pension provider to deduct LPT from their pay/pension. What is the employer/pension provider to do? LPT can only be deducted in payroll when it is stated on the employee s/pensioner s P2C. The employer/pension provider should advise the employee/pensioner to contact Revenue s LPT Branch to arrange for deduction at source. 1.4 Who is responsible for refunding overpayments of LPT? Revenue will deal with ALL refunds of LPT. Employers are NOT to make any refunds of LPT. 1.5 Can an individual who opts to have LPT deducted from their wages/ occupational pension arrange to have the payments deducted in uneven amounts to suit their personal circumstances? No. The employer will collect the total LPT stated on the P2C by spreading it evenly over the pay periods occurring in the period. 1.6 What revisions to forms will be made to cater for LPT? LPT will be reported as follows: P30 New field: Local Property Tax P35 Declaration One new field: Total Local Property Tax P35L One new field per employee: Local Property Tax P60 New field: Total amount of Local Property Tax deducted in this period of employment if applicable Form P45 New field: Total amount of Local Property Tax deducted in this period of employment if applicable Note: LPT will not be reported on: o P35LT - the end of year return for employees without PPS numbers, or o P45 Supplement - Particulars of payments made to a former employee since date of leaving which were not included on the original P45. 7

8 1.7 What priority will be applied to deduction of LPT in payroll? Where a Court Order is already made at the time of issuing the P2C (advising LPT deduction) the Court Order will take precedence over the LPT deduction. If the Court Order is made after the P2C (advising LPT deduction) has issued, the LPT deduction will take precedence. LPT takes precedence over all non-statutory deductions. Example 1 A Court Order is already made before the P2C (advising LPT deduction) is issued. A Court Order is made since A P2C showing LPT of 260 issues in mid June As the Court Order was made before the issue of the P2C, the Court Order deduction will take precedence. Order of deductions up to 30 June Allowable pension contributions / PAYE / USC / PRSI 2 Court Order 3 Non-statutory deductions Order of deductions from 1 July Allowable pension contributions / PAYE / USC / PRSI 2 Court Order 3 LPT 4 Non-statutory deductions A revised P2C showing LPT of 220 issues in October The date of the original P2C for 2013 applies for priority of deductions. The order of deductions will not change. Order of deductions from October Allowable pension contributions / PAYE / USC / PRSI 2 Court Order 3 LPT 4 Non-statutory deductions Example 2 A Court Order is made after the P2C (advising LPT deduction) is issued. A P2C showing LPT of 260 issues in mid June There is no Court Order made at this time. Order of deductions up to 30 June Allowable pension contributions / PAYE / USC / PRSI 2 Non-statutory deductions 8

9 Order of deductions from 1 July Allowable pension contributions / PAYE / USC / PRSI 2 LPT 3 Non-statutory deductions A Court Order is made from 1 September As the Court Order was made after the P2C, the LPT deduction takes precedence. Order of deductions from 1 September Allowable pension contributions / PAYE / USC / PRSI 2 LPT 3 Court Order 4 Non-statutory deductions A revised P2C showing LPT of 220 issues in November The date of the original P2C for 2013 applies for priority of deductions. The order of deductions will not change. Order of deductions from November Allowable pension contributions / PAYE / USC / PRSI 2 LPT 3 Court Order 4 Non-statutory deductions Example 3 A P2C (advising LPT deduction) is issued at the same time that a Court Order is made. A P2C showing LPT of 200 issues on 1 September A Court order is made with effect from 1 September In this situation, the Court Oder takes precedence. Example 4 Deduction at source stops and subsequently recommences in the same year. A Court Order made in the period before the Revised P2C (advising LPT recommencement) is issued. Note For priority of deduction purposes, where a revised P2C issues stopping LPT deduction at source (i.e. showing LPT: 0.00), the date of any subsequent P2C (advising LPT deduction) issued in the year should be treated as the date of first instruction to deduct LPT in the year. A P2C showing LPT of 300 issues in mid June There is no Court Order made at this time. LPT deductions commence from 1 July

10 Order of deductions from 1 July Allowable pension contributions / PAYE / USC / PRSI 2 LPT 3 Non-statutory deductions A Court Order is made from 1 August As the Court Order was made after the P2C issued, the LPT deduction takes precedence. Order of deductions from August Allowable pension contributions / PAYE / USC / PRSI 2 LPT 3 Court Order 4 Non-statutory deductions In September 2013, the employee changes his method of LPT payment. A revised P2C showing LPT: 0.00 issues. The employer stops deducting LPT. Order of deductions from September Allowable pension contributions / PAYE / USC / PRSI 2 Court Order 3 Non-statutory deductions In October 2013, a revised P2C showing LPT: issues. Priority of deduction: As the Court order is already made at the time the revised P2C (advising LPT recommencement) issues, the Court Order takes precedence. Order of deductions from October Allowable pension contributions / PAYE / USC / PRSI 2 Court Order 3 LPT 4 Non-statutory deductions See FAQ 3.10 regarding LPT deduction at source stopping and then recommencing in the same year. 1.8 An individual asks their employer to stop deducting LPT from their salary. What is the employer to do? Until such time as an employer receives a P2C showing LPT: 0.00, he/she is obliged to operate on the amount of LPT stated on the P2C. The employer should advise the employee to contact the LPT Branch to arrange for a different method of LPT payment. If the employee agrees a different method of payment with Revenue, a revised P2C showing LPT: 0.00 will issue. The employer will then stop deducting LPT from salary. 10

11 1.9 An employee/pensioner disagrees with the figure of LPT stated on the P2C. What is the employer/pension provider to do? The valuation of an individual s property is a matter between the individual and Revenue. The employer/pension provider should advise the employee/pensioner to contact Revenue s LPT Branch. Until such time as a revised P2C is received, the employer/pension provider is obliged to deduct the amount of LPT advised on the current P2C Should LPT deductions be shown on employees /pensioners payslips? Yes, where LPT deductions have been made from employees /pensioners payments, it should be shown on employees/pensioners payslips Is a refund of Pension Related Deductions (PRD) regarded as emoluments for the purpose of deducting LPT? Yes, providing the employee is still in employment. However, once the individual has ceased employment the employer ceases deduction of LPT. Therefore, where a refund of PRD is made after date of cessation LPT cannot be deducted from the refund Is an employer permitted to deduct LPT from an amount of expenses paid to an employee? Round-sum expenses payments (lump sum expenses payments) whether paid weekly, monthly, yearly or otherwise, which are paid to the employee to cover expenses are emoluments assessable to income tax under Schedule E. As such LPT can be deducted from round-sum expenses. However, payments made to the employee which are no more than reimbursement of vouched expenses, actually incurred by the employee in performing the duties of the employment are not emoluments assessable to Schedule E and as such, LPT should not be deducted Where LPT is not deducted due to the employee being off payroll for a period of time or where there is a shortfall in the LPT deducted in a pay period (employee has insufficient income to meet the LPT deduction), is the employer required to notify the shortfall to Revenue? Where there are shortfalls due to insufficient net salary in a particular pay period(s) the employer should adjust the amount of LPT to be deducted per pay period (for the remaining pay periods in the year) to ensure the full amount of LPT is collected by the end of the year. Once this is done, the employer will not be required to notify Revenue about the shortfall. However, employers must notify Revenue in writing (e.g. by Secure to employerslpt@revenue.ie) where there will be insufficient income to satisfy the employee s full LPT liability for the year, based on the expected income for the employee What are the obligations of property owners? Where property owners decide to pay their LPT by deduction at source from their salary/occupational pension, it is their responsibility to ensure that this payment method will cover their full LPT liability for Where deduction at source from salary/occupational pension would not cover their full LPT liability for 2013, a different payment method should be chosen. Alternatively, they may be eligible to 11

12 defer payment of all or part (50%) of their LPT liability, if they meet certain conditions (full details on deferring payment of LPT are available on the website). 2. Employer Tax Credit Certificate P2C 2.1 How will employers/pension providers know when they have to deduct LPT from an employee s/pensioner s salary/pension? The instruction to deduct LPT will be given via the employer Tax Credit Certificate (P2C) both the ROS and the paper versions. 2.2 When are P2Cs, incorporating LPT, due to issue to employers/pension providers? P2Cs incorporating LPT are expected to issue in mid June Note: Employers/pension providers are not permitted to deduct LPT from employees salary/pension prior to 1 July See FAQ 4.1 regarding holiday pay paid in advance. 2.3 How is LPT information shown on the paper version of employer Tax Credit Certificates (P2Cs)? Deduction at source from Salary / Occupational Pensions will start from 1 July LPT will be shown in the section below the USC section. Example P2C Extract hereunder: Note The new LPT field will appear on all P2Cs issuing after mid June Under the LPT heading, where deduction at source does not apply, LPT will be shown as 0.00 where deduction at source applies, a figure of LPT will be shown where deduction at source is to stop, LPT will be shown as Voluntary or mandatory LPT Deduction at Source Property owners can voluntarily opt to pay their LPT by deduction at source from salary or occupational pension. However, where individuals do not submit a LPT 12

13 return or fail to meet their LPT payment obligations, mandatory deduction at source from salary or occupational pension will be imposed. Employers/pension providers will not know from the P2C whether the LPT was chosen voluntarily or imposed mandatorily. All P2Cs will just show the LPT to be deducted. 2.4 The new P2Cs, incorporating LPT, will issue in June As an employer/pension provider, will I receive P2Cs for all employees/pensioners in June or just for the employees/pensioners who will have LPT deducted at source from their salary/pension? You will receive P2Cs only for the employees/pensioners who will have LPT deducted from their salary/pension. 2.5 The P2C will show the amount of LPT to be deducted in the employment to 31 December. The employer will break this figure down into the number of pay days occurring. What is the rule regarding rounding of figures? Figures should be rounded in the individual s favour. Example A P2C in respect of a weekly-paid employee issues in June 2013, showing LPT of 300 is to be collected in the period 1 July to 31 December As there are 26 weekly pay days occurring in the period, the weekly LPT to be collected is: 300 / 26 = which is rounded to [Note: The amount of LPT deducted at 31 December 2013 will be: x 26 = This shortfall, as a result of rounding, is acceptable.] 2.6 The basis of deduction (cumulative or week 1/month 1) is stated on the P2C will this affect the deduction of LPT? No. The deduction of LPT is a separate calculation to PAYE and USC. The amount of LPT advised on the 2013 P2C is the amount that is to be deducted in this employment up to 31 December Example A 2013 P2C issues on a week 1/month 1 basis, showing LPT in the amount of 260. The week 1/month 1 basis marker applies to PAYE and USC only. It does not apply to LPT. LPT in the amount of 260 is to be deducted in the period 1 July to 31 December In this employment 26 weekly pay days occur between 1 July and 31 December The employer calculates that the employee will pay 10 LPT every weekly pay day. At 31 December 2013, 260 ( 10 x 26 pay days) will have been deducted. 2.7 P2Cs incorporating the new LPT field will issue to employers/pension providers in June 2013 for LPT deductions commencing from 1 July Will these P2Cs contain the normal P2C tax and USC information? Yes. The only change to the P2C is the addition of the new LPT field Total LPT to be deducted. The P2C continues to operate in the same way as before. 13

14 Revised P2Cs may issue for various reasons changes in tax credits, tax/usc Cut- Off Points and LPT. When an employer/pension provider receives a P2C they should import all the (tax, USC, LPT) information stated thereon into payroll. Example A cumulative P2C issues in March 2013 in respect of a new employee, advising tax credits and tax/usc Cut-Off Points (COPs). It also advises that the following previous details are to be taken into account in calculating tax and USC: Total Pay: 2, Total Tax: 0.00 Total Gross pay for USC purposes 2, Total USC deducted: The employee opts to have the LPT deducted from his salary. A new cumulative P2C issues in June 2013, showing LPT of 300 is to be collected in the period 1 July to 31 December This new P2C also contains the employee s total tax credits and tax/usc Cut-Off Points. The previous details shown on the March P2C are also shown on this June P2C: Total Pay: 2, Total Tax: 0.00 Total Gross pay for USC purposes 2, Total USC deducted: In October 2013, the employee claims an additional tax credit and a revised cumulative P2C issues to the employer. The P2C shows an increase in tax credits, while the tax/usc COPs and LPT remain the same. The previous details of pay and USC are again shown on this revised P2C. The employer will import all tax, USC and LPT information from the P2C into payroll. 2.8 An employee has a second live employment with the same employer at the same time. How will the employer know how to deduct LPT? Where an employee has a second live employment with the same employer and the employer wishes to keep the two sets of pay separately, the employer can arrange to have a second P2C issue under a different PPS number format. Where LPT is to be deducted from this employee s wages/salary, it will be stated on just one of the P2Cs issuing, under one particular PPS number. Example An individual (PPS number A) has two employments with the same employer at the same time they are employed as a sales assistant during the day and also works in the accounts office one night per week. They appear on the payroll twice. As the employer wishes to record the two sets of pay separately, he/she arranges to have 2 P2Cs issue - The P2C with PPS number A is used for the first employment (sales assistant), and The P2C with PPS number AT is used for the second employment (accounts office). The individual opts for LPT deduction at source. 14

15 A P2C issues under PPS number A advising LPT: The employer applies this P2C to the payroll recorded under PPS number A and deducts LPT from the (sales assistant) wages. Where a P2C issues under PPS number AT, the LPT will be shown as This means that LPT is not to be deducted from the payroll recorded under PPS number AT (accounts office). 2.9 Where is the LPT element shown on the ROS P2C file? ROS registered employers/pension providers receive P2Cs in electronic format via their ROS Inbox which they import directly into their payroll software. The files are viewable in CSV file format. The LPT element appears at the far right, after the tax and USC elements in the CSV file. 3. LPT deduction in payroll 3.1 How is the figure of LPT shown on the P2C to be applied in payroll? The LPT stated on the P2C is the total amount of LPT that should be deducted from the employee s/pensioner s salary/pension in the period to 31 December Deductions are to be spread evenly over the number of pay days occurring in the period to 31 December Example A weekly paid employee opts for LPT deduction at source in A P2C issues to his employer, advising - Total LPT to be deducted: This shows that LPT in the amount of 260 is to be deducted in the period 1 July to 31 December In this employment 26 weekly pay days occur between 1 July and 31 December The employer calculates that the employee will pay 10 LPT every weekly pay day. At 31 December 2013, 260 ( 10 x 26 pay days) will have been deducted. Note Unlike PAYE tax credits and PAYE/USC Cut-Off Points, the figure for LPT shown on the P2C will not be broken down into monthly and weekly amounts. Only the total amount to be deducted in payroll to 31 December will be shown. See FAQ 2.5 regarding rounding of figures. 3.2 In mid June I received a P2C for a monthly-paid pensioner showing an amount of LPT to be deducted from 1 July However, I have already run the July payroll. What am I to do? As the July payroll has already been run the LPT deduction will commence in August. Instead of the LPT amount advised on the P2C being collected over 6 months (July December), it will be collected over 5 months (August December). 15

16 3.3 An employee who has ceased employment is due arrears of pay. The P2C in place at the date of cessation advised an amount for LPT. Do I deduct LPT from the arrears payment? No. LPT should not be deducted from the arrears of pay payment. Once the individual has ceased employment the employer ceases deduction of LPT. The employer should complete a P45 Supplement as usual in respect of the arrears payment. 3.4 How will Revenue notify employers/pension providers to stop deducting LPT from an employee s/pensioner provider s salary/pension? An LPT amount of 0.00 shown on the P2C is the instruction to stop deducting LPT. Example A P2C in respect of a weekly-paid employee issues in June 2013, showing LPT of 260 is to be collected in the period 1 July to 31 December As there are 26 weekly pay days occurring in the period, the weekly LPT to be collected is On 1 October the employer receives a P2C showing an LPT amount of (The employee has paid off the LPT balance or has elected to pay it by another payment option). The employer will stop deducting LPT with effect from this date. (Note, this is not an instruction to the employer to refund LPT already deducted in the employment. Revenue will deal with ALL refunds of LPT). In this example, the employee ceases employment on 15 October. The employer will insert the amount of LPT deducted in the period 1 July to 30 September on the P An individual has two periods of employment with the same employer in the year. What figures of LPT are to be returned on forms P45, P60 and P35L? This is best illustrated by way of an example: A P2C in respect of a weekly-paid employee issues in June 2013, showing LPT of 260 is to be collected in the period 1 July to 31 December As there are 26 weekly pay days occurring in the period, the weekly LPT to be collected is The employee ceases employment on 31 August At date of leaving, the amount of LPT deducted is 90 ( 10 pw x 9 pay days). P45 The employer will complete the P45 as follows: Total amount of Local Property Tax deducted in this period of employment: The individual recommences employment with the same employer on 1 October 2013 and hands in a P45. The employer submits P45 Part 3 to Revenue. As a pay day occurs before a new P2C is received, the employer calculates tax and USC using the tax credits and tax/usc Cut-Off Points shown on the P45 on a week 1 basis. As the employer has not received a P2C showing LPT for this period of employment (commencing 1 October), no deduction is made for LPT. A P2C is received on 9 October in time for the second pay day in October. The cumulative P2C advises previous pay, tax and USC details to be taken into account in 16

17 payroll, along with an LPT amount of 170. This is an instruction to the employer that 170 LPT is to be deducted in this period of employment - from the date of commencement 1 October to 31 December As there are 12 pay days remaining in the period to 31 December, the amount of LPT to be deducted per week is 170 / 12 = At 31 December 2013, LPT of has been deducted. P60 The 2013 P60 will show: Total amount of Local Property Tax deducted in this period of employment: P35L The 2013 P35L will show: Local Property Tax: ( 90 plus ) Note: The LPT entries required on the P60 are slightly different to the entries required on the P35L. When an employee has worked for the same employer a number of times during the tax year, the LPT figure that the employer enters on the P60 and P35L are as follows: P60: the figure of LPT deducted in the latest period of employment P35L: the combined details of LPT deducted for all periods with that employer for the full year. 3.6 What is the employer to do when a new employee gives them a P45 showing an amount for LPT deducted? An employer who is given parts 2 and 3 of form P45 should retain part 2 and send part 3 to Revenue. This can be done electronically through the Revenue On-Line Service (ROS). Revenue will issue a P2C to the new employer. If a pay day occurs before receipt of the P2C the new employer should operate PAYE/USC either on a week 1 basis or on the emergency basis. Even though there is a figure for LPT deducted shown on the P45, the employer is not to deduct LPT until such time as they receive a P2C showing LPT is to be deducted in the employment. Where the new employee asks the employer to deduct LPT from their wages/pension, the employer should advise the employee/pensioner to contact Revenue s LPT Branch to arrange for deduction at source. Example John has a LPT liability of 247 for the year He commences in a new employment on 1 October Their P45 shows that LPT in the amount of 67 has been deducted in their previous employment. The new employer submits P45 Part 3 to Revenue. As a P2C is not received in time for the first payday on 4 October, the employer deducts tax and USC on a week 1 basis. The employer does not deduct any LPT but waits for the P2C to issue from Revenue, despite the P45. A P2C, advising Total LPT to be deducted: arrives in time for the second payday on 11 October. As 12 weekly pay days occur in the period from 11 October to 17

18 31 December 2013, the amount of LPT to be deducted per week is 180 /12 = 15 At 31 December 2013, LPT of has been deducted. P60 The 2013 P60 will show: Total amount of Local Property Tax deducted in this period of employment: P35L The 2013 P35L will show: Local Property Tax: On 1 October 2013, I received a revised P2C for an employee showing a reduced figure of LPT. How do I apply this in payroll? When an employer/pension provider receives a revised P2C showing a revised LPT amount, he/she should take into account the amount of LPT already deducted in payroll and collect the balance by even deductions in the pay periods remaining to 31 December. Example 1 A weekly paid employee opts for LPT deduction at source in A P2C issues to his employer, advising - Total LPT to be deducted: In this employment 26 weekly pay days occur between 1 July and 31 December The employer deducts LPT of 10 per week. On 1 October a revised P2C is received, showing a reduced LPT amount of 220. LPT of 130 ( 10 per week x 13 weeks) has been deducted to date. The employer will calculate the new weekly LPT deduction as follows: Amount of LPT to be deducted per P2C in Amount of LPT deduced to date in the employment Balance to be deducted in the period 1 Oct to 31 Dec Number of pay days remaining in the period to 31 December 2013: 13 Amount of weekly LPT to be deducted in the period Oct to Dec: / 13 = 6.92 Example 2 A weekly paid employee opts for LPT deduction at source in A P2C issues to his employer, advising - Total LPT to be deducted: In this employment 26 weekly pay days occur between 1 July and 31 December The employer deducts LPT of per week. On 1 December a revised P2C is received, showing a reduced LPT amount of 290. LPT of ( per week x 22 weeks) has been deducted to date. The employer will calculate the new weekly LPT deduction as follows: Amount of LPT to be deducted per P2C in

19 Amount of LPT deducted to date in the employment Balance to be deducted in the period 1 Dec to 31 Dec 0.00 As the amount of LPT stated on the P2C has already been deducted, the employer will cease deducting LPT with immediate effect. In this example the employee has overpaid his LPT. Employers are NOT to refund LPT. Revenue will deal with ALL refunds after 31 December. 3.8 On 1 December 2013, I received a revised P2C for a pensioner showing an increased figure of LPT. However, I have already run my December 2013 payroll. What am I to do? As the December payroll has already been run it is too late to operate on this revised P2C. The underpayment of LPT is a matter between the individual and Revenue. 3.9 What is an employer/pension provider to do if he/she receives a revised P2C showing the same amount of LPT that was advised on the previous P2C? If the employer/pension provider has already included this LPT amount in payroll, there is no change to LPT deduction required. He/she should continue to deduct the LPT each pay day. Example 1 A P2C issues in June 2013, advising an LPT amount of 260. This amount of LPT is to be deducted from the employee s salary between the period 1 July and 31 December As there are 26 weekly pay days occurring in the period, the employer will deduct LPT of 10 per week. On 1 September 2013, a revised P2C is received. The tax credits have changed but LPT remains the same: 260. The employer imports the P2C into payroll. The LPT figure of 260 shown on the P2C is the amount of LPT that is to be collected in the employment from 1 July to 31 December As the employer began LPT deductions in July, some of this LPT has already been deducted. As there is no change in the LPT amount, the employer will just continue to deduct 10 per week. By 31 December 2013, a total of 260 will have been deducted. Example 2 An employee commences a new employment on 25 September A P2C issues on a week 1 basis in time for the first pay day in October. The P2C advises an LPT amount of 195. As there are 13 weekly pay days occurring in the period October to December, the employer will deduct LPT of 15 per week, commencing on 3 October. At the end of October, the employer receives a cumulative P2C for the employee. The figure of LPT remains the same: 195 the amount of LPT that is to be deducted in the period of employment to 31 December Note - this is not an instruction to deduct 195 from the date of issue of this revised P2C. It is an instruction to the employer that an amount of 195 LPT is to be deducted in the period of employment, 25 September to 31 December As the employer 19

20 began LPT deductions in October, some of this LPT has already been deducted. As there is no change in the LPT amount, the employer will just continue to deduct 15 per week. By 31 December 2013, a total of 195 will have been deducted Can an employee s/pensioner s LPT deduction at source from salary/pension stop and then recommence at a later stage in the same year? Yes. How this operates in payroll is best illustrated by way of an example. A weekly paid employee opts for LPT deduction at source in A P2C issues to his employer in June 2013, advising - Total LPT to be deducted: This shows that LPT in the amount of 260 is to be deducted in the period 1 July to 31 December In this employment 26 weekly pay days occur between 1 July and 31 December The employer calculates that the employee will pay 10 LPT every weekly pay day. At the end of August 2013, the employee contacts Revenue to change their LPT payment method from deduction at source to paying via a service provider. Revenue issue a revised P2C on 1 September 2013 showing LPT: The employer stops deducting LPT with effect from this date. To date the employee has had 90 ( 10 x 9 weeks) LPT deducted from his salary. At the end of October 2013, after paying 100 LPT via a service provider, the employee contacts Revenue to have deduction at source from his salary reinstated. Revenue issue a revised P2C on 1 November 2013 showing LPT: calculated as follows: LPT payable in 2013: Less amount paid via a service provider: Amount to be collect via deduction at source The employer will calculate the new weekly LPT deduction as follows: Amount of LPT to be deducted per P2C in Amount of LPT deducted to date in the employment (1 July 31 Aug) Balance to be deducted in the period 1 Nov to 31 Dec Number of pay days remaining in the period to 31 December 2013: 8 Amount of weekly LPT to be deducted in the period Nov to Dec: / 8 = 8.75 P60 The 2013 P60 will show: Total amount of Local Property Tax deducted in this period of employment: P35L The 2013 P35L will show: Local Property Tax:

21 3.11 I am an employer and have discovered that I have been over deducting LPT from an employee. What am I to do? You should recalculate the amount of LPT to be deducted in the remaining pay periods to 31 December. Where there are no remaining pay periods, Revenue will look after the refund of overpaid LPT after 31 December. Example 1 A P2C issues in June 2013 showing LPT: The employer calculates that he will deduct 10 per week over the 26 weekly pay days occurring in the period 1 July 2013 to 31 December At the end of October, the employer discovers that he has over-deducted LPT having deducted 200 instead of 180 ( 10 x 18 pay days). The employer must now recalculate the LPT to be deducted in the remaining 8 weekly pay days, as follows: Amount of LPT to be deducted per P2C in Amount of LPT deducted to date in the employment (1 July 30 Oct) Balance to be deducted in the period 1 Nov to 31 December Number of pay days remaining in the period to 31 December 2013: 8 Amount of weekly LPT to be deducted in the period 1 Nov to 31 Dec: / 8 = 7.50 Example 2 The employer discovers in December 2013 that he has over-deducted LPT having deducted 280 instead of 260 which was shown on the P2C. As the last payroll run of 2013 has already taken place it is too late to rectify this in payroll. The employer should NOT refund this overpayment of LPT. Rather, he should advise the employee that LPT has been over deducted. The employee can claim the refund from Revenue. The end of year returns should show the actual amount of LPT deducted: P60 The 2013 P60 will show: Total amount of Local Property Tax deducted in this period of employment: P35L The 2013 P35L will show: Local Property Tax: Revenue provides an electronic Tax Deduction Card (etdc) at Has this etdc been revised to accommodate LPT? No. Due to space restriction, the etdc has not been updated. However, a new Local Property Tax (LPT) Payroll Card will be made available via the same link. 21

22 3.13 How is LPT to be deducted in a year where there is an extra pay period week 53, fortnight 27, etc? Where an extra pay period occurs in the year, e.g. 53 weekly pay periods, the employer/pension provider can choose to deduct the total LPT due over 53 weeks or to deduct the total amount due over 52 weeks, leaving the 53 rd week free of LPT deduction What is an employer to do when an employee has insufficient net pay in a pay period to pay their LPT? Employers should deduct the LPT as per the instruction on the P2C and in the next pay period they should recalculate the amounts to be deducted evenly in the remaining pay periods to 31 December. If it is evident to the employer that the employee will continually have insufficient net pay to deduct the LPT that is due to be deducted by 31 December, the employer must notify Revenue in writing (e.g. by Secure to employerslpt@revenue.ie) that the employee has insufficient income to satisfy the employee s full LPT liability for the year, based on the expected income for the employee. Where the LPT liability is being paid by deduction at source from an employee s salary, it is the employee s responsibility to ensure that this payment method will cover their full LPT liability for Where deduction at source from the employee s salary would not cover their full LPT liability for 2013, a different payment method should be chosen. Alternatively, they may be eligible to defer payment of all or part (50%) of their LPT liability, if they meet certain conditions (full details on deferring payment of LPT are available on the website) How is LPT to be deducted where an employee has an irregular pay pattern, the pay frequency not known in advance? The pay frequency that applies for tax and USC should be applied for LPT. Example A lecturer is employed on a part-time basis by a university. Their work pattern is not known in advance. Each year a cumulative P2C issues to the university with a portion of the employee s annual tax credits/cut-off point and USC cut-off points allocated to this employment. Whenever the employee is paid for teaching work tax and USC are deducted using the P2C applied on a monthly basis. A cumulative P2C issues in July 2013, advising LPT of 260. At the time the P2C is issued the employee has no teaching hours scheduled. In October 2013, the employee is given three weeks work and is paid at the end of the period. The employer applies the tax credits/cut-off point and USC cut-off points cumulatively to the October monthly payroll. The employer will calculate the LPT deduction as follows: Amount of LPT to be deducted per P2C in Amount of LPT deducted to date in the employment 0.00 Balance to be deducted in the period October to 31 December

23 Number of (monthly) pay days remaining in the period to 31 December 2013: 3 Amount of monthly LPT to be deducted in the period Oct to Dec: / 3 = The employee has no further teaching work with the university in 2013 and so the full amount of LPT stated on the P2C ( 260) has not been deducted by the employer. This is a matter between the employee and Revenue. See FAQ 1.13 regarding employers obligations A four-weekly paid employee is leaving employment having worked only one week in their last pay period. Should their LPT deduction be apportioned on this last pay day? No. The full four-weekly amount of LPT should be deducted. Example A P2C in respect of a four-weekly paid employee issues in June 2013, showing LPT of 280 is to be collected in the period 1 July to 31 December As there are 7 four-weekly pay days occurring in the period, the LPT to be collected each pay day is The employer deducts LPT of 40 on the pay days occurring on 12 July, 9 August and 6 September. The employee ceases employment on 13 September 2013 week number one of the four-weekly pay cycle. On this last pay day, even though the employee has worked only one week in the pay period, the full four-weekly amount of LPT ( 40) should be deducted. The same principle applies to fortnightly-paid employees - the full fortnightly amount should be deducted How are Supplementary/Bonus payroll runs to be treated for LPT deductions? Where the employee has chosen LPT deduction at source or where it has been mandatorily imposed by Revenue, it is desirable that an amount of LPT is deducted from every payroll run. However, the deduction process should be fair to the individual. Where a Supplementary/Bonus payment is quite small, an LPT deduction may seem excessive. Example A Supplementary payroll is run for an overtime gross payment of 100 a week after the July normal monthly payroll run from which LPT of 40 was deducted. The following deductions are made from the Supplementary payment: 23

24 Gross payment (say) 41% (say) 7% % 4.00 LPT (200 / 6) Total deductions Net As 40 LPT has already been deducted from the employee s July salary, it may seem excessive to expect an additional deduction from a small Supplementary gross payment one week later. As Revenue s previous instruction was to deduct LPT from all payroll runs, some post-1 July 2013 payroll software may have been set up in such a way as to not distinguish between normal payroll runs and Supplementary/Bonus payroll runs and are deducting an amount of LPT automatically from every payroll run. This is acceptable for However, from 1 January 2014, LPT should not be deducted from Supplementary/Bonus payroll runs An individual has two periods of employment with the same employer in the year, the second period of employment ceasing before 31 December. What figures of LPT are to be returned on forms P45 and P35L? This is best illustrated by way of an example: A P2C in respect of a weekly-paid employee issues in June 2013, showing LPT of 260 is to be collected in the period 1 July to 31 December As there are 26 weekly pay days occurring in the period, the weekly LPT to be collected is The employee ceases employment on 31 August At date of leaving, the amount of LPT deducted is 90 ( 10 pw x 9 pay days). P45 The employer will complete the P45 as follows: Total amount of Local Property Tax deducted in this period of employment: The individual recommences employment with the same employer on 1 October 2013 and hands in a P45. The employer submits P45 Part 3 to Revenue. As a pay day occurs before a new P2C is received, the employer calculates tax and USC using the tax credits and tax/usc Cut-Off Points shown on the P45 on a week 1 basis. As the employer has not received a P2C showing LPT for this period of employment (commencing 1 October), no deduction is made for LPT. A P2C is received on 9 October in time for the second pay day in October. The cumulative P2C advises previous pay, tax and USC details to be taken into account in payroll, along with an LPT amount of 170. This is an instruction to the employer that 170 LPT is to be deducted in this period of employment - from the date of commencement 1 October to 31 December As there are 12 pay days remaining in the period to 31 December, the amount of LPT to be deducted per week is 170 / 12 =

25 The employee ceases employment on 30 October At date of leaving, the amount of LPT deducted in this second period of employment) is ( pw x 3 pay days). P45 The employer will complete the P45 as follows: Total amount of Local Property Tax deducted in this period of employment: P35L The 2013 P35L will show: Local Property Tax: ( 90 plus 42.48) 4. Absence from work holiday pay, sick leave, etc 4.1 How is LPT applied to holiday pay paid in advance of the usual pay day? The 'increased' pay the employee receives in the week immediately preceding the week / 2 weeks holidays is not extra pay earned in that particular week but rather the pay for the following week / 2 weeks brought forward and paid in that particular week. In this situation, the amount of LPT due in the following week(s) is brought forward to be paid in that particular week. It should be noted that this does not apply where the employee is being paid holiday pay immediately before leaving the employment. Note LPT deduction at source commences on 1 July Even though the P2Cs incorporating LPT will issue in mid June 2013, employers/pension providers are not permitted to deduct LPT from employees salary/pension prior to 1 July Where an employee who has opted for LPT deduction at source is receiving holiday pay in respect of July 2013 holidays but paid in advance in June 2013, the employer is not to deduct LPT from the payment. The LPT deductions will commence in the first payroll run after 1 July A four-weekly paid employee is receiving holiday pay paid in advance in respect of two weeks holidays. How is LPT deducted in this case? In this case the employee will pay the LPT due on their four-weekly salary as normal and will pay half their four-weekly LPT amount on their two weeks holiday pay. In their next four-weekly salary period they will receive payment for two weeks (as the other two have already been paid in advance) and will pay half their four-weekly LPT amount in this pay period. 4.3 Under the Shorter Working Year Scheme an employee is absent on special unpaid leave for a 4-week period in Summer How will LPT be deducted in this situation? Leave granted under this scheme is unpaid special leave. Instead of having no salary payments for the period of the special leave, employees have the option to have their 2013 salary (reduced by the unpaid leave) paid in approximately equal amounts over the full 52 weeks of the tax year. In the employee s application for this special leave, the employee will have specified their salary preference for 2013 to have four weeks 25

26 without salary or to receive a reduced salary in every week. The number of pay days occurring in the year will therefore be known in advance. The LPT Tax figure shown on the P2C will be deducted in even amounts over the number of pay periods to 31 December Example An employee is absent on special unpaid leave for a period of 4 weeks in August A P2C issues in June 2013, showing LPT of 260 is to be collected in the period 1 July to 31 December Where the employee opts to have no salary payments for the 4 weeks of special leave in August Between 1 July and 31 December 2013, there are 22 pay days - the 4 weeks of unpaid special leave in August are excluded. The LPT to be deducted each pay day is 260 / 22 = Where the employee opts to have their 2013 salary (annual salary reduced by the 4 weeks unpaid leave) paid in approximately equal amounts over the full 52 weeks of the tax year Between 1 July and 31 December 2013, there are 26 pay days. The LPT to be deducted each pay day is 260 / 26 = Where employees, who have opted for LPT deduction from wages, are absent from work on sick leave or maternity leave throughout the year, how will LPT be deducted? How LPT will be deducted will depend on the particular circumstances or arrangements between employers and employees while employees are absent from work on sick leave or on maternity leave whether the employee is paid or unpaid while absent. Employers who pay full or partial salary to employees while absent from work on sick leave or on maternity leave As the employee is receiving either full or partial salary, the employer should deduct LPT as normal. The LPT stated on the P2C is the total amount of LPT that should be deducted from the employee s/pensioner s salary/pension in the period to 31 December. Deductions are to be spread evenly over the number of pay days occurring in the period to 31 December. Employers who do not pay salary to employees while absent from work sick leave or on maternity leave During the period of absence, as the employee is not being paid, no LPT can be deducted. When the employee returns to work the amount of weekly LPT to be deducted is adjusted to ensure the full amount of LPT is collected by year end. 26