Additional tax free benefits possible for your employees this Christmas, along with other Finance Act 2022 changes
The Finance Act 2022 has been signed into law and there are items employers should be aware of, including an increase in the amount employers can provide their employees by way of a qualifying voucher – a welcome change in the run up to Christmas. Other changes include the extension of the Foreign Earnings Deduction and the Special Assignee Relief Programme (SARP).
Key Points for Employers
We have set out below the key changes in the Finance Act 2022 that employers should be aware of.
Small Benefits Exemption
Effective from 2022, the annual limit for this exemption is increased from €500 to €1000. The changes also increase the number of vouchers that employers can provide to an employee each year from one to two i.e. previously only one voucher up to €500 could be provided to employees per year but from 2022 onwards, two vouchers can be provided to employees per year up to a total value of €1,000. As noted, this change is effective for the 2022 tax year and therefore applies to such vouchers provided to employees this Christmas.
Employers will have to keep record of and report to Revenue, certain benefits that are not subject to PAYE withholdings including the remote working daily allowance of €3.20, travel and subsistence expenses and the small gift exemption discussed above. This change however, is subject to commencement order and Revenue providing information and guidance on the format and manner in which these benefits will be reported.
Bike to Work scheme
From 2023, the Bike to Work Scheme will be extended to include cargo bicycles and e-cargo bicycles by increasing the threshold of the tax free benefit-in-kind amount to €3,000.
Special Assignee Relief Programme (SARP)
SARP has been extended to 31 December 2025. For those arriving in Ireland from 1 January 2023 onwards, the minimum income requirement is raised from €75,000 to €100,000. A PPS number is now also required for SARP applicants and the relevant employer must confirm that it has complied with its PAYE commencement obligations as outlined in the Income Tax (Employments) Regulations 2018.
Foreign Earnings Deduction
The foreign earnings deduction relief has been further extended to 31 December 2025.
Key Employee Engagement Programme (KEEP)
KEEP has been extended to the end of 2025 with a number of changes. These changes are those introduced by the Finance Act 2019 that were subject to commencement by Ministerial Order. The changes include extending the application of the relief to companies who operate through certain group structures, extending the relief to qualifying part time employees and bringing existing shares into the scope of the relief, rather than only new shares.
Covid-19 Related Lay-Off Payment Scheme (CLRP)
Starting from 2022, payments related to the CLRP are to be exempt from income tax. These payments were legislated for under the Redundancy Payments (Amendment) Act 2022 and subject to certain conditions, are payable to individuals who lost the opportunity to accrue reckonable service due to layoffs as a result of Covid-19 related restrictions. This change will affect those who (a) have been made redundant since 13 March 2020, or are made redundant before 31 January 2025; and (b) have lost the opportunity to build reckonable service due to temporary lay-offs caused by the COVID-19 restrictions from 13 March 2020 to 31 January 2022.