Income Levy / Parking Levy in Urban Areas

Income Levy
Parking Levy

1. Income Levy

1.1 Income Levy

A new income levy was introduced with effect from 1 January 2009 and is payable on gross income from all sources before any tax reliefs, capital allowances, losses or pension contributions. It is a separate calculation to PAYE and PRSI.

1.2 The rates of the income levy

For payroll purposes the following income levy rates apply:

Applicable to payments made from 1 January 2009 to 30 April 2009 inclusive
Income Thresholds Per Year	Income Thresholds Per Week	Income Thresholds Per Month	Rate of Income Levy
Up to €100,100	Up to €1,925	Up to €8,342	1%
From €100,101 to €250,120 inclusive	From €1,926 to €4,810 inclusive	From €8,343 to €20,844 inclusive	2%
In excess of €250,120	In excess of €4,810	In excess of €20,844	3%

Applicable to payments made on or after 1 May 2009
Income Thresholds Per Year	Income Thresholds Per Week	Income Thresholds Per Month	Rate of Income Levy
Up to €75,036	Up to €1,443	Up to €6,253	2%
From €75,037 to €174,980 inclusive	From €1,444 to €3,365 inclusive	From €6,254 to €14,582 inclusive	4%
In excess of €174,980	In excess of €3,365	In excess of €14,582	6%

1.3 The following are exempt from the income levy:

Individuals whose annual income does not exceed €15,028 (€289 per week)
Holders of Full medical cards
Social welfare payments
Individuals aged 65 or over whose annual income does not exceed €20,000 (€385 per week)

Married couples, one or both of whom are aged 65 or over, whose combined income does not exceed twice the single threshold (2 x €20,000) are entitled, after end of the year of assessment, to make a claim for a refund of income levy deducted.

1.4 Deductions made on a week 1 / month 1 basis

Employers are responsible for deducting the income levy from income, including notional pay, which they are paying to an employee. They are not required to take account of income arising from other sources/employments. Income levy deductions are made on a week 1 / month 1 basis within each employment.

1.5 The income levy is a separate calculation to PAYE and PRSI

The income levy is a separate calculation to PAYE and PRSI. Any deduction for the income levy does not reduce the gross pay for PAYE/PRSI purposes, as illustrated in the following example:

Example

Note - For the purpose of this example the income levy rates applicable to the period from I May 2009 are used.

An employee earns €800 per week.
Their weekly deduction for Salary Sacrifice for the Travel Pass Scheme is €20
Their weekly deduction for employee superannuation is €40

Income levy calculation:

Gross pay € 800
Less Salary Sacrifice for Travel Pass € 20
Income levy is applied to € 780 x 2% = €15.60

Note: the income levy is applied before the employee superannuation is deducted.

PRSI calculation:

Gross pay €800
Less Salary Sacrifice for Travel Pass € 20
Less employee superannuation € 40

PRSI is applied to €740 at the appropriate rate(s)

PAYE calculation:

Gross pay €800
Less Salary Sacrifice for Travel Pass € 20
Less employee superannuation € 40

PAYE is applied to €740 at the appropriate rate(s)

1.6 Employer records

Employers should keep the following records in relation to the income levy for each employee for each year:

Amount of emoluments liable to the income levy
Amount of income levy deducted from each payment made
Total amount of income levy deducted.

2009 income levy records

As different rates of income levy applied for the periods 1 January 2009 to 30 April 2009 and from 1 May 2009 to 31 December 2009, employers should keep separate records in respect of both these periods in 2009.

1.7 Remitting the income levy to the Collector General

Employers should remit the income levy to the Collector General at the same time and in the same manner as the deductions under the PAYE system. The income levy amount is to be included with the figure for PAYE on form P30.

1.8 Exclusion Order cases

In circumstances where an individual is in receipt of Schedule E income which is subject to an Exclusion Order, and that individual is resident in a State which has a Double Taxation Agreement with Ireland, then in those particular circumstances income levy should not be deducted from the Schedule E payment, and any income levy deducted since 1 January 2009 may also be refunded.

In any other circumstances where an employer have been issued with an Exclusion Order, the income of the named employee is subject to the Income Levy in the same way as the income of all other employees.

Revenue will be requesting employers to remit the Income Levy collected from such employees subject to Exclusion Orders, by including this figure

in the PAYE field on the P30
in the Total Tax/Income Levy Liability field in the P35 Declaration
in the separate fields provided specifically for employees subject to exclusion orders in the P35LF

1.9 Payments made after 1 January 2009 but which relate to an earlier year(s)

Any payments made on or after 1 January 2009 but which relate to 2008, or an earlier year(s), will be subject to the income levy at the appropriate rate(s) even though the payments are in whole or in part for some year of assessment other than that during which the payment is made.

1.10 Redundancy payments

Statutory redundancy payments are exempt from the levy. Statutory redundancy payments amount to 2 weeks pay per year of service plus a bonus week subject to a maximum payment of €600 per week.

In addition, ex-gratia redundancy payments in excess of the statutory redundancy amount are exempt from income tax, and therefore also the income levy, up to certain limits. These limits are up to €10,160 plus €765 per complete year of service in excess of the statutory redundancy. The basic exemption as outlined above can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme.

Any relevant emoluments paid which are in excess of these limits are subject to the income levy in accordance with section 531B of the Taxes Consolidation Act 1997. It should be noted that the income levy is charged after granting the statutory exemptions set out above, and after granting any additional relief or deduction for Standard Capital Superannuation Benefit (SCSB).

The taxable element of redundancy payments paid between 1 January 2009 and 30 April 2009 will be subject to the income levy rates and thresholds in force in the first four months of 2009.

1.11 Employee expenses

Any expense payments which are only a recompense for expenses incurred in the performance of duties, are not subject to the income levy. Allowances which are in the nature of pay and are part of an individual’s gross income are subject to the levy.

1.12 Income levy certificate on cessation of employment

When an employee ceases employment the employer should issue an income levy certificate to the employee along with form P45. The employee retains this certificate as their personal record of their income levy deductions while in the employment. They should not send it to Revenue or give it to their new employer. Employers should not send a copy of this certificate to Revenue.

The information detailed on this certificate will be for ‘this employment only’. Where an individual had more than one period of employment with the same employer in the year the certificate will state the income levy information in respect of the latest period of employment only. The individual will be given an income levy certificate each time they cease employment. This will mean, for example, that where an individual commenced and ceased employment three times with the same employer in 2010 they will receive three income levy certificates from this employer in 2010. Employers should note that details of the income levy should not be included on forms P45.

The income levy certificate should be issued even when employees have nil income levy deducted during their employment.

Some payroll software systems will print a version of the certificate automatically from the payroll record.

Alternatively, employers can use the Revenue template (PDF 481KB). Simply fill in the details on screen and print it out.

A paper version of this income levy certificate is available from
Revenue’s Forms & Leaflets Service
Telephone (24-hour service) 1890 30 67 06
+ 353 1 70 23 050
e-mail: custform@revenue.ie

1.13 Overpayments and refunds of the income levy

The income levy is calculated on a week 1 / month 1 basis. Where the income levy has been applied for particular pay period(s) throughout the year but the employee is ultimately liable at either a lower rate or are exempt because they have not exceeded the annual thresholds, they will have overpaid the income levy. In this situation they will be due a refund of some or all of any income levy paid.

Where the employee has been in continuous employment with an employer throughout the year in question (for the full 52 weeks/12 months), their employer should refund any overpayment of income levy deducted at that time.

Where the employee has not been in continuous employment with an employer throughout the year in question, Revenue, rather than the employer, will deal with any refund of income levy due.

Where an employee has provided evidence of entitlement to a full medical card at any time during the year the employer may make an immediate refund of any income levy deducted up to that point, and should not deduct any further levy for the remainder of that year.

1.14 Under deductions of the income levy

The income levy is applied on a week 1 / month 1 basis. Where an employer/pension provider finds that the income levy has been under deducted at year end they are not to deduct more income levy. Revenue will deal with any underpayments arising.

1.15 Use of exemption of €18,304 for persons aged under 65 years

Where an employer used a pro-rata amount of the exemption of €18,304 (€352 per week) for persons aged less than 65 years in the period between 1 January 2009 and 30 April 2009, the exemption used is ring-fenced for income in respect of this period. Employers do not need to recalculate the levy deduction in respect of this period with regard to the revised lower exemption limit of €15,028 (€289 per week), which has effect from 1 May 2009.

Any claims for repayment of levy deducted in cases of this type will be dealt with by Revenue after the end of the year.

1.16 End of year records

The P35 suite of forms have been revised to take account of the income levy. There are no changes to the P60. Details of the income levy will not be shown on the P60. An end of year Income Levy Certificate should be given to each employee along with their form P60. This end of year certificate (similar to the income levy certificate on cessation of employment) will show the employee’s

Gross Income for Income Levy, and
Amount of Income Levy Deducted

for the periods 1 January to 30 April 2009 and from 1 May to 31 December 2009.

The income levy certificate should be issued even when employees have nil income levy deducted during their employment.

Some payroll software systems will print a version of the certificate automatically from the payroll record.

Alternatively employers can use the Revenue template (PDF, 872KB) (See sample form in Sample Forms)
Simply fill in the details on screen and print it out. A paper version of this income levy certificate is available from
Revenue’s Forms & Leaflets Service
Telephone (24-hour service) 1890 30 67 06
+ 353 1 70 23 050
e-mail: custform@revenue.ie

1.17 Frequently Asked Questions document

Revenue’s Frequently Asked Questions on the income levy (PDF 607KB). Revenue will continue to update this source of income levy information.

1.18 Employers to grant the €40,000 income levy exemption in payroll

At present, individuals aged 65 or over whose annual income does not exceed €20,000, are exempt from paying the income levy. However, a married couple,

who is taxed under joint assessment or separate assessment, and
one or both of whom are aged 65 or over in the year, and
whose combined gross income from all sources (excluding Social Welfare payments) does not exceed €40,000,

are exempt from the income levy.

From 1 January 2010, individuals, who qualify for the €40,000 exemption under the above criteria, can apply to have income paid to them throughout the year without deduction of income levy.

To qualify for this treatment, an individual must complete a declaration form (PDF, 347KB) and return it to their employer/pension provider. By means of this form Revenue authorise an employer/pension provider to pay the income without deduction of the income levy. The form can be downloaded from the Revenue website. A paper version of the form (see sample form in Sample Forms) is available from:
Revenue’s Forms & Leaflets Service
Telephone (24-Hour service) 1890 30 67 06
If calling from outside the Republic of Ireland please phone + 353 1 70 23 050
Email: custform@revenue.ie

When an individual gives this completed form to their employer/pension provider, the employer/pension provider should stop deducting the income levy and refund any amount of income levy already deducted from 1 January 2010.

If the individual’s circumstances change and they no longer qualify to have their income/pension paid without deduction of income levy, they are obliged to notify their employer/pension provider. In such circumstances the employer/pension provider should then begin deducting the income levy from the next payment in the usual manner.

2. Parking Levy

2.1 Parking Levy in Urban Areas

The car parking levy is a charge on employees for the use of car parking facilities provided by the employer in designated urban areas.

2.2 The start date for the levy will be determined by the Minister for Finance and will be included in an Order to be made by that Minister.

2.3 The areas where the parking levy will apply

The levy will apply to employer-provided parking facilities in the major urban centres of Cork, Dublin, Galway, Limerick and Waterford. The specific areas in which the levy will apply will be designated by Order of the Minister for Finance following consultation with the 5 city councils. A copy of any such order will be placed on the Revenue website once it is made.

2.4 Liability to pay the parking levy

An employee will be liable to the levy where:

he or she has an entitlement to use a parking space for the parking of a vehicle covered by the levy,
the parking space is provided directly or indirectly by the employer, and
the parking space is located in an area designated by the Minister for Finance.

2.5 Entitlement to use a parking space

Entitlement to use a parking space arises where any one or more of the following circumstances apply:

the employee holds or has been issued with any type of authorisation to use a parking space or is given any type of permission (including arrangements or agreements with the employee) to use a parking space,
the employee holds or has been issued with any form or means of access to a parking space;
the employee has been allocated a dedicated parking space;
the employee has been allocated a parking space on a shared basis or other similar arrangement,
the availability of a parking space to the employee is on a first-come – first-served basis.

2.6 When is an employer regarded as providing a parking space to an employee?

In general, an employer is regarded as providing a parking space to an employee where the parking space is provided directly or indirectly, including where:

the employer provides the parking space at its own premises,
the parking space is provided at the premises of a person with whom the employer is connected, or
the employer enters into an arrangement or agreement with an employee or some other person to provide a parking space.

The legislation also covers a situation in the public sector where the employer for the purposes of the Tax Acts i.e. the person who pays an employee’s salary, may not be the provider of the parking facility. This arises, for example, in the education area where the Department of Education pays the salaries of certain teachers and other staff while an individual school provides the parking. In that situation, the Department is deemed to be the provider of the parking facility for the purposes of the legislation.

2.7 Disclaiming entitlement to use a parking space

An employee can disclaim entitlement to use a parking space by notifying his or her employer in writing or in an electronic format. Additionally, the employee should:

return whatever form of authorisation he or she holds and any form or means of access to a parking space, and
cease actual use of the parking space.

In such circumstances, the employer should stop deducting the levy.

The disclaimer provision is designed for situations where an employee wishes to disclaim entitlement to use a parking space on a permanent basis. This permanency is reflected in the fact that a formal notification is required to be made to the employer, any form of authorisation and any form or means of access to a parking space must be returned to the employer, and actual use of a parking space must cease.

The disclaimer provision is not designed for periods of annual leave or short periods where an employee does not make use of a parking space. Revenue will, however, look sympathetically at situations where use of the disclaimer provision may be appropriate for practical reasons. Periods of unpaid leave may be considered in this context.

2.8 Parking space provided in a 'customer' car park

Where the availability of a parking space to an employee is in a car-park which is normally available to, or reserved for, customers, the levy will generally apply. For example, the levy will apply in circumstances where the employer is providing the parking spaces and an employee is given a dedicated parking space or the availability of a space to the employee is on a first-come – first-server basis.

2.9 Parking space provided in a public car park

The parking levy will apply where an employer enters into any type of arrangement or agreement with an employee (or any other person) to provide a parking space to the employee. This includes where a space is provided in a public car-park.

2.10 Reimbursement of parking fees by employer

The parking levy does not apply where an employer reimburses an employee for parking fees incurred for on-street parking or for parking in public car-parks. However, unless such reimbursement arises as a result of a legitimate claim for expenses incurred by the employee in the performance of his or her duties, the employer should apply PAYE to the amount of reimbursement involved.

2.11 Employer makes payments to employees to cover the parking levy

In circumstances where an employer makes a payment to an employee in compensation for, or in re-imbursement of, the levy then:

there is no deduction available to the employer in respect of the payment in computing the amount of its profits which are chargeable to tax, and
the payment should be subjected to deductions under the PAYE system in the normal manner.

2.12 Infrequent use of a parking space

If an employee has an entitlement to use a parking space, but chooses to use it infrequently, the parking levy still applies even if the use of the space arises for 10 days or less in a year. These circumstances do not come with the "occasional permission to use a parking space" exclusion below.

2.13 An employee with two employments

If an employee has two employments and has entitlement to use a parking space in both employments, then the parking levy will have to be deducted in both employments. (However, see below for 'Job-sharing and Part-time work').

2.14 Two parking spaces available to an employee

If an employee has, due to the nature of his or her employment, more than one parking space available to him or her at different locations, then only one levy will apply in relation to the entitlement to use a parking space in connection with that employment. An example would be where an employee is required to carry out the duties of his or her employment across different offices of the employer.

2.15 A car supplied by a car leasing company

It is understood that, in certain circumstances, employees may have access to a car, supplied by or hired from a car-sharing company, at their place of work for business use during the day. Access to the car for specific periods of time would generally be managed by the company supplying the car. Use of a car in such circumstances would not be subject to the parking levy. Where, however, an employee is otherwise entitled to the use of a parking space under the terms of the legislation, the levy would apply.

2.16 Amount of the parking levy

Subject to possible reductions in the levy in the situations covered in this section (and any exemption which may apply – see below), the amount of the levy will be a flat rate amount of €200 for a full year. In the first year of the levy, the amount of the levy payable will be reduced on a pro-rata basis to reflect the period of the year in which the levy is effective.

Shared Parking Arrangements

A reduced levy applies where car parking spaces are shared between employees provided that the ratio of employees (who have an entitlement to park) to each car parking space is 2:1 or more. In these circumstances, the levy for employees with an entitlement to park will be reduced to €100.

Job-sharing and Part-time work

Where an employee’s normal pattern of work is on the basis of part-time or job-sharing arrangements, then the levy amount payable is reduced pro-rata but not below a minimum of 50 per cent of the amount payable.

Entitlement to use a parking space for only part of a year

Where an employee’s entitlement to use a parking space applies for only part of a year, then the amount of the levy payable by the employee is to be reduced on a pro-rata basis. This is designed to cover situations such as where an employee starts or finishes work during the year. For example, if an employee’s entitlement to use a space commences on 1 December in a year, then only 1/12th of the levy will apply for that year. This would mean that a person who is given, say, a dedicated space would pay €16.66 for the month of December (i.e. €200 x 1/12th).

Maternity leave

Where an employee is on maternity leave, the 26 week period of maternity leave to which she is entitled is disregarded for the purposes of the levy. Additionally, the 10 week period immediately prior to the commencement of maternity leave is also disregarded.

Shift work

The amount of the levy is also reduced in the case of shift workers. Anyone starting or finishing work after 9 o’clock in the evening or before 7 o’clock in the morning will have the part of the year during which they are on shift work involving those hours disregarded for the purposes of calculating the levy. For example, someone doing such shift work for 3 months of the year would be liable to pay €150 (i.e. €200 less 1/4 excluded because of shift work).

An employee on annual leave / sick leave

There is no reduction in the amount of the levy for periods of annual or sick leave.

Employee contributions to the employer towards the cost of a parking space

There is no reduction in the amount of the levy for contributions made by an employee to his or her employer towards the cost of a parking space. The trigger for liability to the levy is that an employee has entitlement to use a parking space and the space is provided directly or indirectly by the employer. Therefore, the levy will apply whether the parking is free or whether a nominal or other amount is paid by an employee to the employer.

2.17 Exemptions from the parking Levy

Disabled drivers

An employee who has an entitlement to use a parking space will be exempt from the levy where he or she is the holder of a valid disabled person’s parking permit.

Employees of the emergency services

Official vehicles required to be driven by employees of certain emergency services are excluded from the levy (see ‘Vehicles excluded from the parking levy’ below). An employee of a State or civil emergency service who does not otherwise have entitlement to use a parking space will be exempt from the levy where the use of a parking space for his or her private vehicle (or for a vehicle provided by the emergency service) relates solely to a response to an emergency situation.

Retired persons

Retired persons are exempt from the levy where a space continues to be provided to them for occasional use. However, in circumstances where a retired person is engaged in employment by his or her former employer, or indeed by any other employer, the retired person will be liable to pay the levy.

Occasional permission to use a parking space

Where an employee does not otherwise have entitlement to use a parking space, permission which is occasionally given to use a space is exempt from the levy provided that the total number of days involved in any year does not exceed 10 days. For the purposes of this exemption, use of a parking space for part of a day is treated as use for a full day.

2.18 Vehicles covered by the parking levy

In general, the levy will apply to private cars and vans used as private vehicles (i.e. where such vans are not required to be used by an employee in the performance of his or her duties of employment - see ‘Vehicles excluded from the parking levy’ below). Jeeps and other vehicles constructed with rear passenger seats are also included.

Company cars

An employee who uses a company car will be liable to the levy where he or she has an entitlement to use a parking space. The charge to the parking levy is a separate matter from any liability to benefit-in-kind which may apply in relation to the car.

Private cars used for business purposes

An employee who uses his or her own car in the performance of his or her duties will be liable to the levy.

2.19 Vehicles excluded from the parking levy

In general, motor bikes are excluded from the levy. Certain official cars owned or provided by the State, the Garda Síochána, the Defence Forces and certain other services such as the fire and ambulance service and the Customs service are excluded. A van is excluded from the levy where the employee is required by the employer to use the van in the performance of his or her duties.

2.20 Employer records

Employers will be obliged to keep records, for each year, in relation to:

the location(s) at which parking facilities are provided, including the number of parking spaces provided at each location
the name and PPS number of each employee who has, or ceased to have, an entitlement to use a parking space, and
evidence of the deduction of the parking levy from relevant employees.

2.21 Deduction and remittance of the parking levy

Deductions of the levy will be spread throughout the year in line with the frequency of salary payments. Deductions are made from employees’ net salary payments after income tax, PRSI, the Health Levy and the new Income Levy are deducted.

Each employer should remit the levy deducted to the Office of the Collector-General at the same time and in the same manner as the employer currently remits deductions made under the PAYE system.

P30

Employers will continue to file their P30 in accordance with their existing filing pattern i.e. whether that is monthly or quarterly. Direct Debit customers and AnnualRemitters will continue their existing payment arrangements also. Direct Debit customers should review the amount of their Direct Debit payment to take account of the parking levy and, if necessary, increase the amount of their Direct Debit payment. There will be no changes to the existing Form P30. Employers will be required to include the amount of the parking levy being remitted to Revenue in the PRSI box on the P30.

2.22 Under-deductions and over-deductions of the parking levy

In situations where the amount of the levy deducted from an employee is insufficient or where an over-deduction has been made, the employer should make the appropriate adjustment through the salary or wages of the employee as soon as possible. A corresponding adjustment should then be made to the next remittance of parking levy made to the Collector-General's Office.

2.23 End of year records

The Form P35 will be revised to facilitate reporting by employers of the number of employees from whom they have deducted the parking levy and the overall amount of the levy so deducted.

2.24 Guidance document on the parking levy in urban areas

Revenue's guidance document on the parking levy (PDF, 173KB).

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