What are employee benefits?

Employee benefits are non-salary compensation; they are direct, indirect and non-cash payments within an overall remuneration package.  They are provided by businesses in addition to salary to create a competitive package for employees – current and perspective. Generally, the benefits that employees receive from an employer are taxable. Examples include company cars, loans, medical insurance premiums and childcare facilities. Most taxable employer benefits are added to employee pay and taxed in the same way.

There are two types of benefits that an employee may get in addition to a salary:

  1. Benefits-in-kind. These are benefits that an employee receives that cannot be converted into cash but have a cash value. Examples include the provision of a company car, loans given at a special rate or provision of accommodation.
  2. Benefits (other than benefits-in-kind). Examples include vouchers, holidays, prizes, etc.

 How are employee benefits taxed?

If an employee earns more than €1,905 per year, they must pay tax on the taxable benefits they receive. The income limit does not apply to a company director.

Most employer benefits received are added to pay and taxed in the same way. As an employer, you still deduct Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the benefit. The amount of the benefit is generally the higher of the cost to you the employer of providing the benefit or the value of the benefit if it can be converted into money or money’s worth less any payment made to an employer for the benefit.

There are special rules for working out the value of some benefits:

  1. accommodation
  2. company cars and vans
  3. loans known as ‘preferential loans’.

 Budget 2019: changes to Benefits-in-kind

The 0% benefit-in-kind rate for electric vehicles introduced in Budget 2018 is being extended for three years, with a cap of €50,000 on the Original Market Value of the vehicle.

 Are some employee benefits non-taxable?

There are some benefits that an employee can receive that are not subject to tax or can be received tax efficiently. These include:

  1. Provision of bus/train passes for one month or more
  2. Bicycle and safety equipment under the Cycle to Work Scheme
  3. Certain share and approved profit-sharing schemes
  4. Canteen facilities
  5. Reimbursement of expenses necessarily incurred in the course of employment
  6. Some accommodation provisions
  7. Lump sum and certain redundancy payments
  8. Working clothes
  9. Non-cash personal gifts not related to employment
  10. Employer’s contribution to statutory or revenue approved pension schemes
  11. Mobile telephones, computer equipment and home high-speed internet connections where those benefits are provided for business use. (Private use is incidental.)
  12. Private use of company van which is mostly for employee’s work and where there is an employer requirement to bring the van home and where another private use is prohibited, and the employee spends most of their working time away from the workplace to which they are attached.

 What is small benefit relief?

Employees can receive a small non-cash benefit from their employer without paying PAYE, USC and PRSI. Such a benefit must have a value of €500 or under This treatment does not apply to cash payments, which are taxable in full. Employees can only avail of this relief once in a tax year, so most businesses use this for Christmas Bonuses. However, if the benefit is more than €500 in value the full value of the benefit is subject to PAYE, USC and PRSI.

Are employee benefits required?

Though employers are not legally required to provide benefits, they are a way to attract and retain employees, contribute towards improving staff well-being and enhance engagement. Here we look at why employee benefits essential for your business.

 

The world of Payroll can be a confusing one. With lots of terms, acronyms and specialised terminology, making sense of it all can be a challenge.  That’s where this glossary comes into play as it will help you to understand the different terms and their explanations, essentially everything you need to be aware of before you run payroll.

AEO – An Attachment of Earnings Order, is where a creditor applies to the court for an order to allow them to take funds from an employees wage.

AVC – Additional Voluntary Contribution – a voluntary contribution made by an employee to a pension scheme, in addition to any regular contributions provided for in the contract of employment.

BIK – Benefit In Kind a benefit from an employer in a form other than a monetary payment (e.g. car, health insurance payment)

Gross Pay – The employee’s total pay including the notional value of BIK before any deductions are made by the employer.

Income Tax – The income tax year is based on the calendar year 1st January to 31st December.

LPT – Local Property Tax – A self-assessed tax charged on the market value of residential properties.

Nett Pay – The amount of pay remaining for issuance to an employee after deductions have been taken from the individual’s gross pay. This is the amount paid to each employee on payday

PAYE – Pay As You Earn – The tax payable on income earned as an employee. Employers are obliged to calculate and deduct PAYE due from the wages or salaries of their employees through the payroll system as they are paid.

Payslip –  Online or printed summary of an employee’s gross-to-net earnings.

PPSN – Personal Public Service Number – Issued by an individual’s local Social and Family Affairs Office.

PRD – Pension Related Deduction –  A deduction from the remuneration of pensionable public servants.

PRSA – Personal Retirement Savings Account – A long-term personal pension plan, designed to let individuals save for retirement in a flexible way.

PRSI – Pay Related Social Insurance – Tax payable by both employer and employee administered by the Department of Social & Family Affairs. The rate of PRSI payable depends on the personal circumstances of the individual and the number of earnings.

ROS – Revenue On-Line System – A means to conduct transactions with the Revenue through the internet.

SRCOP – Standard Rate Cut-Off Point – The amount of income that is liable to tax at the standard rate of 20%. Any income more than the SRCOP will be responsible to tax at a higher rate, currently 41%.

Taxable Pay – An employee’s gross pay less certain deductions approved by Revenue which are allowable for tax purposes, such as contributions to a Revenue approved Pension Scheme, PHI Scheme or deductions under an approved Salary Sacrifice Arrangement.

USC – The Universal Social Charge is a tax on income. It is charged on gross income before any pension contributions.

Hop to it! Easter is just around the corner, and there are lots to be done. While you nibble on some chocolate, check out our handy guide for tax deadlines dates in Ireland and the UK this April.

HMRC (UK)

April 1: Commencement date for Making Tax Digital for VAT

April 4: Gender pay gap report publishing deadline for businesses and charities for the year ended 5 April 2018

April 5: Last day of 2018/19 tax year and the deadline for various tax claims and elections as well as the use of CGT annual allowances and annual limit for pension contributions

Last date to register to payroll benefits in kind for 2019/20

Forms P46(Car) (electronic form) for the quarter ended 5 Apr to reach HMRC

Deadline for individuals to settle (or agree on a plan with HMRC to settle) outstanding disguised remuneration loans that will otherwise be subject to a tax charge

April 6:  Revaluation date for UK property assets of non-UK residents becoming chargeable to extended UK CGT charge

April 14: Corporation tax fourth quarterly instalment payment for accounting periods ended 31 Dec 2018

April 19: Online CIS return for the month ended 5 April

PAYE cheque payments for the month ended 5 Apr to HMRC (22 Apr for electronic payments). Payment of any other outstanding PAYE and NIC liabilities for 2018/19

April 30: Returns for properties within the scope of an annual tax on enveloped dwellings (ATED) on 1 Apr 2019, and for paying any tax due for 2019/20

IHT is due on lifetime transfers between 6 Apr and 30 Sep 2018.

Revenue Ireland

April 14: PAYE/Pay Related Social Insurance (PRSI)/Universal Social Charge (USC)/

Local Property Tax (LPT): Monthly return and payment for March 2019

Quarterly return and payment for January – March 2019

Dividend Withholding Tax (DWT): Return and payment of DWT for March 2019

Professional Services Withholding Tax (PSWT):

F30 monthly return and payment for March 2019

April 19: Value-Added Tax (VAT):

Monthly VAT 3 return and payment (if due) for the period March together with a Return of Trading Details where the accounting period ends in March

April 19: VAT: Annual VAT 3 return and payment (if due) for the period April – March together with a Return of Trading Details where the accounting period ends in March

April 20: VAT: MOSS VAT return and payment (if due) for the period January – March 2019

April 1-23: Corporation Tax: PT for APs ending between 1-31 May 2019

Corporation Tax: Returns for APs ending between 1-31 July 2018

Corporation Tax: Pay balance due on APs ending between 1-31 July 2018

April 23: Relevant Contracts Tax (RCT): RCT monthly return and payment (if due) for March 2019

RCT: RCT quarterly return and payment (if due) for period January – March 2019

April 1-30: Corporation Tax: Returns of Third-Party Information for APs ending between 1-31 July 2018

Where the return and payments are not received electronically, the return and payments filing date are 1-21 of the relevant months.

All information on dates is sourced directly from Revenue Ireland’s and HRMC’s websites and published by Intelligo for informative purposes only. For more details or with any queries on these dates, please contact these bodies directly.

 

Hosted Software or Software as a service (SaaS) is a software distribution model in which a third-party provider hosts software and makes the software available to customers via the cloud. The benefits of such a service mean this is now a growing service trend among many businesses in the UK and Ireland. Rather than make vast investments of time and infrastructure in hosting and maintaining a system on site, more and more organisations are opting for the convenience and cost-savings available by using a Hosted Software Provider.

However, as the popularity of hosted systems grows, how can companies discern which provider is the right one? Here are some questions to ask a potential Hosted Software Provider before you sign on the dotted line.

  1. How are the fees managed?

Hosted solutions mean there is no need to set up additional servers or infrastructure because everything is managed externally from a secure location. Generally, you pay for this service monthly, but be sure to confirm with the provider, that this is the case. Ensure you are fully aware of the coverage you receive for this fee, such as technical support.

  1. What security procedure and accreditations do they have?

One of the concerns many companies have about hosted solutions is data security, especially considering the GDPR reform. This is an especially critical area for Payroll and HR departments due to the sensitive nature of the data they hold. A good starting point is to look at your processes and see how the Hosted Software Provider’s security standards match up. Ensure the supplier has procedures in place for disaster recovery and meets a recognised standard such as ISO27001 which is an internationally recognised best practice framework for an information security management system.

  1. How are updates handled?

One of the significant selling points of hosted solutions is the minimal fuss required to update the system. Traditionally, in-house systems could take considerable time to upgrade which was both costly and time-consuming. By comparison, hosted solutions tend to undergo regular and scheduled maintenance. Ensure this is the case with the Hosted Software Provider and that these updates will be communicated to you well in advance.

  1. How long will the changeover take?

Getting any new system off the ground can be an intricate process. With the amount of time and resources it can take before it’s fully working, it’s always a good idea to get a grasp on the provider’s implementation processes. So, ensure you ask the provider for a project plan so you are fully aware of how long this process will take, as too much downtime between changes can affect your business.

Above all, ensure you chose a hosted software provider that has excellent customer service, good client experience feedback and a strong support team.

AI & Payroll ? Originally posted on LinkedIn Pulse, by Intelligo Director Padraig Gill.

According to a recent Irish Times article, machines will do ‘more than half’ of workplace tasks by 2025. McKinsey estimates up to 800 million workers globally could be displaced by robotic automation by 2030. The Nevin Economic Research Institute estimates that, in Northern Ireland alone, 7% of jobs are at risk of being lost entirely and 58% are at risk of changing substantially as a consequence of advances in artificial intelligence and robotics.

So, what does this, or could this, mean for Payroll? Apart from having to pay less people every pay period, there are perhaps certain tasks, or elements of the payroll function, that could potentially be automated with the advent of artificial intelligence and machine learning. A great example surely would have to be handling of (basic) employee queries. AI-powered chatbots could, for example, answer a range of basic employee questions. Think of the top reasons why people contact your payroll team right now – questions such as ‘When are we getting paid?’, ‘What will my net pay be next month?’, ‘What’s our employer reg. number?’ – could all be questions answered by a ‘bot’. The payroll process itself though, would be significantly more difficult to automate – where unplanned inputs can vary from period to period (e.g. ad hoc salary payments) and data can come from unexpected sources. Coupled with this, it’s hard to foresee automation replacing the human element of a raised eyebrow – “that doesn’t look quite right” and accurately interpreting data with the right context in mind, in order to decide if the data they’d received was appropriate or not, e.g. payroll may receive an instruction to pay Jim 5 hours overtime – automation will just pay it – but the payroll person would question it, as they know that Jim nearly always refuses to work overtime!

We will continue to see examples of AI seep into our everyday lives (think Siri and Alexa) and undoubtedly we will increasingly hear that robots, automation and artificial intelligence will put millions of people out of work. In payroll terms, people will undoubtedly remain (for now!) the decision makers and a fundamental part of the payroll process. We will still be around for some time to come! What automation will offer though, even in the short term, is the potential to handle repetitive and common payroll tasks, like dealing with employee queries, spotting patterns and perhaps even identifying fraudulent activity, leaving more time for the payroll team to solve real payroll problems and further develop the payroll function. In the meantime, payroll people will continue to do what they always do and adapt to the changed circumstances.