On the 27th of September 2022, budget changes were announced. The budget set out an overall package of €11 billion.
We have outlined below the changes that will impact payrolls.
There are links included also for further information.
Small Benefit Exemption Increase
The government extended the Small Benefit Exemption. This means the amount that employers can give workers by way of tax-free vouchers a year has doubled. The gift exemption is a popular way for businesses to incentivise and reward staff.
It must not be in the form of cash. If the benefit exceeds €1,000 in value, the full value would be subject to tax.
In his Dáil speech, Minister for Finance Paschal Donohoe said: "The Small Benefit Exemption allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI and USC”
The small benefit exemption increased from €500 to €1,000. Two benefits can be given and can apply in the 2022 year.
Extension of the Debt Warehousing scheme
A welcome relief for businesses as Revenue announced a significant extension to the Debt Warehousing scheme for a further 12 months. This means that all businesses can now defer their responsibility to either clear their debt in the warehouse or enter into a phased payment arrangement to clear the debt until 1st May 2024.
Widening of Standard Rate Tax Bands
As of the 1st of January 2023, there will be a widening of the income tax bands. There will be an increase in tax credits also which will have a positive impact on take-home pay.
Statutory Sick Pay
For the first time in Ireland, approval was granted by the government for new laws to give all workers the right to paid sick leave. The Sick Leave Bill 2022 was approved by Cabinet and will legislate for a statutory sick pay scheme for all employees. It will be phased in over a four-year period.
Sick pay will be paid by employers at a rate of 70% of an employee's wage.
Changes in BIK
As of the 1st of January 2023, Benefit in Kind (BIK) tax is going to increase by 40%, in some cases, for those who are given a vehicle by their employer.
The calculation of the tax will change to a combination of mileage and CO2 emissions from 2023 onwards.
There will be five emissions bands from A, being the lowest, to E, being the highest.
Minimum wage increase
The national minimum wage is set to increase on 1st of January 2023 by 80c per hour.
This will bring the hourly rate up to €11.30 for workers who are 20 years old and over. The budget introduced an adjustment to the threshold for USC (universal social charge) to keep full-time workers on the new minimum wage outside the higher rates of USC.
The Tánaiste stated that “Since 2015, the National Minimum Wage has increased from €8.65 per hour to its current rate of €10.50 per hour, and will now increase to €11.30 in January 2023 keeping pace with inflation”.
Automatic Enrolment (Pension)
Auto-enrolment is a pension investment scheme for employees, which involves their employer matching their contributions of a set percentage of their gross income with a top-up from State funds.
Under Auto Enrolment employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State. A key feature of the system is that although participation is voluntary, so that people don’t have to participate, it operates on an ‘opt-out’ rather than an ‘opt-in’ basis.
Our dedicated Quintas payroll team would be happy to discuss any of the Budget changes and its impact on your business.