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IMPORTANT END OF YEAR NOTICE TO EMPLOYERS & PENSION PROVIDERS

This employer notice covers the following topics:

2017 Employer Tax Credit Certificates (P2Cs)

2018 Employer Tax Credit Certificates (P2Cs)

Universal Social Charge (USC)

USC Exemption on P2Cs

Employer Obligations when hiring an employee

Taxation of Illness Benefit and Occupational Injury Benefit from 1 January 2018

DEASP to cease issuing Illness Benefit and Occupational Injury Benefit Notifications to Employers/Pension Providers

Changes to Form P45 for 2018

Data Alignment Project - updating of 'W-numbers where new PPSN issued

Employee Pension Contributions: Age-related percentage limits and earnings ceiling

P35 Filing: feedback regarding issues that may need to be regularised before year-end

2017 Employer Tax Credit Certificates (P2Cs)

Revenue will cease issuing 2017 P2Cs with effect from 1 December 2017. An exception to this will be for employees/pensioners commencing employment or pension, where the commencement is notified to Revenue in the period from 1 December to 31 December, Revenue will continue to issue P2Cs through ROS to employers/pension providers until end-December 2017.

2018 Employer Tax Credit Certificates (P2Cs)

In December, Revenue will issue 2018 P2Cs to employers/pension providers for all employees/ pensioners, advising the rates and thresholds applicable from 1 January 2018.

Revenue is requesting that employers/pension providers, where possible, hold back running 2018 payrolls until they receive the 2018 P2Cs.

In the situation where an employer/pension provider has not received 2018 P2Cs in time to run January/February 2018 payroll(s), employers/pension providers should continue to use the 2017 P2Cs for tax deductions. The USC information on our website - see 'Employing people' - includes updated guidance.

Employers/pension providers should take care when uploading the 2018 P2C data so as not to upload it to 2017 payroll in error. The ROS mail notification about the 2018 P2Cs will explicitly reference that they are 2018 P2Cs.

Universal Social Charge (USC)

As announced in Budget 2018, the rates and thresholds of the USC are changing with effect from 1 January 2018. The USC information on our website - in 'Jobs and pensions' and 'Employing people' - has been updated to take account of these changes.

USC Exemption on P2Cs

Where Revenue estimate (generally based on previous year's earnings) that the employee's/ pensioner's total annual earnings (from all USC-able sources) will not exceed the USC Exemption threshold of €13,000, the USC exemption will be stated on the P2C.

However, where it is known that an employee's/pensioner's pay for USC purposes will in fact exceed the €13,000 threshold, we ask payroll to advise the employee/pensioner to contact Revenue to have a revised tax credit certificate (P2C) issued. This can be done by individuals online using myAccount (by selecting 'PAYE Services') or by contact with his or her Revenue office. This will avoid a situation where the employee/pensioner has an under-deduction of USC at the end of the year (where the exemption is exceeded, USC becomes payable on all income).

Employer Obligations when hiring an employee

First ever employment
An employee who has never worked before in the State must register with Revenue so that the correct amount of tax and USC will be deducted from their wages. It is an employee's responsibility to register with Revenue using myAccount (selecting ' Add Job or Pensions' in PAYE Services) if it is their first ever job in the State.

Second or subsequent employment
If an employee has worked in the State previously, he or she may have a Form P45 from the current or previous year. Payroll may use the tax credits, tax and USC cut-off points from the P45 to tax him or her on a temporary basis. Part 3 of the P45 must be completed and submitted to Revenue immediately.

If an employee has no Form P45 he or she should contact Revenue to register their job or pension using the Jobs and Pensions service in myAccount. Payroll must tax them on the emergency basis until a Tax Credit Certificate (P2C) is received.

All employees must be registered with Revenue. If they do not register their jobs themselves, then payroll must register them.

Taxation of Illness Benefit and Occupational Injury Benefit from 1 January 2018

Currently employers and pension providers are required to include with taxable pay, all taxable Illness Benefit and Occupational Injury Benefit payments paid to employees/pensioners by the Department of Employment Affairs and Social Protection (DEASP).

With effect from 1 January 2018, this is no longer the case. From that date Revenue will incorporate the taxable element of Illness or Occupational Injury Benefit into employees'/pensioners' tax credit certificates. This will have the effect of reducing employees'/pensioners' available tax credits and/or rate bands. Their USC rate bands will not be affected.

Department of Employment Affairs and Social Protection to cease issuing Illness Benefit and Occupational Injury Benefit Notifications to Employers/Pension Providers

The Department of Employment Affairs and Social Protection (DEASP) has advised that, from 1 January 2018, it will cease issuing Illness and Occupational Injury Benefit notifications to employers/pension providers. These notifications were issued to employers/pension providers to assist them in calculating their employees'/pensioners' tax. As Illness Benefit and Occupational Injury Benefit will be incorporated into employees'/pensioners' tax credit certificates from 1 January 2018, employers/pension providers no longer require these notifications to calculate their employees'/pensioners' tax.

Any queries in relation to Illness Benefit payments should be directed to the Department of Employment Affairs and Social Protection. Any queries in relation to taxation should be directed to Revenue.

Changes to Form P45 for 2018

The paper Form P45 will be updated for 2018 to remove all references to Illness Benefit. The updated paper P45 will be available to non-ROS employers from early December 2017 and can be ordered from: Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

The ROS version of the P45 is not changing for 2018. Where a figure is input in the Illness Benefit field a pop-up message will advise that this field may only be populated if the cessation date is before 1 January 2018.

Data Alignment Project: updating of 'W-numbers' where new PPSNs issued

As part of PAYE Modernisation, Revenue is updating a number of customer records in advance of the introduction of the new PAYE system from 1 January 2019.

W-Numbers
W-numbers, which are PPSNs that include a 'W' as the second alpha character for example 1234567TW, are being updated where a new, distinct PPSN has been issued by the Department of Employment Affairs and Social Protection (DEASP).

Since September 2017, Revenue is identifying and replacing a significant volume of 'W-numbers' that have been replaced by new, distinct PPSNs. As the Revenue records are updated, we are writing to employees/pensioners to advise them to use their new, distinct (correct) PPSN in all future communications and to access our online services (ROS and myAccount). Registered customers can continue to use our online services, but need to remember to access the services using their new, distinct PPSNs.

Therefore, payroll/pension departments may notice an increase in the number of cases where PPSNs are changed on tax credit certificates, and should ensure that all relevant payroll records are updated to the new PPSN.

To assist payroll/pension departments, the tax credit certificate (P2C) will be updated to highlight cases where the PPSN has been changed. In such cases the P2C will issue under the new PPSN and the former PPSN (W-number) will also be referenced.

Employee Pension Contributions: Age-related percentage limits and earnings ceiling

Tax relief in respect of employee contributions to a Revenue approved pension scheme is generally granted to the employee under the 'net pay arrangement'. The employee's gross pay is reduced by the amount of their pension contributions before tax deductions are calculated. There is no relief from USC or PRSI.

Some employees who are members of occupational pension schemes may also opt to make regular additional voluntary contributions (AVCs) from their salaries. Relief may also be granted by way of the net pay arrangement.

Employers must ensure that the combined contributions, normal contributions plus any Additional Voluntary Contributions do not exceed the following age based percentage ceilings and earnings ceiling:

Age-related percentage limits
Age % of Earnings
Under 30 Up to 15%
Between 30 & 39 Up to 20%
Between 40 & 49 Up to 25%
Between 50 & 54 Up to 30%
Between 55 & 59 Up to 35%
60 & Over Up to 40%


Earnings ceiling
The annual earnings ceiling, which applies for the purpose of tax relief on contributions to pension products, is €115,000. Where an employee's annual earnings exceed this amount, tax relief is limited to €115,000 x the age-related percentage.

P35 Filing: feedback regarding issues that may need to be regularised before year-end

(i)Correct PPSN
Payroll/pension departments are reminded to ensure that the correct PPSN is used for their employees/pensioners. All employers/pension providers should have a P2C with the correct PPSN for all their employees or pensioners; and that PPSN should be subsequently used in completing the P35L detail.

Issues have arisen when, for example, an employee/pensioner changes from a 'W' number and has a new PPSN issued by the Department of Employment Affairs and Social Protection(DEASP) and Revenue issue a new P2C under the new PPSN. The employee's/pensioner's new PPSN should be recorded on the P35L. Where an employer continues to use a cancelled or incorrect PPSN on the P35L, this will cause delay in updating the individual employee's or pensioner's pay and PRSI information to the DEASP.

(ii)Local Property Tax (LPT)
Employers/pension providers are reminded to ensure that LPT is correctly deducted where instructed to do so by Revenue, and is subsequently included on the P35L. Updated P2Cs containing instructions about LPT deductions are issued by Revenue during the year, generally based on a customer's instructions to Revenue. Accordingly, it is important that the latest P2C instruction relating to LPT deductions is used. It is particularly important to ensure that updated information about new PPSNs is used in order that the LPT deductions are correctly recorded on your employee's/pensioner's LPT payment record.

The Employer Customer Service Unit provides information and support to employers.
Contact details as follows:

MyEnquiries: Select 'Employers PAYE' in the 'My Enquiry Relates To' box.

Telephone: 1890 25 45 65 (+ 353 1 7023014 if ringing from outside the Republic of Ireland)

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