Republic of Ireland: Income Levy - Guidance for employers published

Written by Ian Congreave - Filed under: ROI: Income Tax on December 8th, 2008

The 2009 Budget included the introduction of a new income levy from 1 January 2009, to be paid by employees and by the self-employed on top of the income tax they already pay and collected by employers.

Revenue has now published more detailed guidance on the levy in the format of a question and answer document entitled Income Levy - Notes for Guidance and Implementation Arrangements for Employers.

The income levy is payable on gross income before any relief for any capital allowances, losses or pension contributions. All individuals are liable to pay the income levy if their gross income exceeds the threshold of €18,304 p.a., or they exceed the income exemption limit of €20,000 p.a. for an individual over 65 years – or €40,000 p.a. for an over-65 married couple.

The rates and thresholds are as follows:

For example, the levy on annual earnings of €300,000 is €5497.80, i.e.
(100,100 × 1%) + ((250,120 -100,100) × 2%) + ((300,000 – 250,120) × 3%)

The collection procedure for employers is as follows:

identify “Gross Income” as defined

deduct the levy from this income at the appropriate rates

pay the total amount of the income levy deducted from employees on form P30 to the Collector General – the levy amount is included with figure for PAYE on form P30

at end of year give the following details on form P35L: