Share based remuneration – Revenue extends deadline for PAYE/PRSI payment

Following from a Department of Finance announcement earlier in the month regarding “grandfathering” rules for share schemes entered into before 1 January 2011, Revenue has issued an e-brief on the subject.

As and from the 1 January 2011 share based payments to employees are subject to PAYE/PRSI and USC. Department of Finance announced previously that agreements entered into before 1 January 2011 will not be subject to the new rules and will remain exempt (in certain circumstances).

As well as reiterating the Department of Finance statement, Revenue sets out its transitional arrangements for the application of PAYE to share based remuneration. Revenue and Department of Social Protection recognise the practical difficulties for employers in amending systems to deal with the new requirements. Revenue will not, therefore seek to impose interest and penalties provided any outstanding liabilities are settled in the June P30 (due 14 July for paper returns; 23 July for online returns).

The transitional arrangements will apply to

  • income tax, PRSI and USC on share awards
  • PRSI and USC on the exercise of Save As You Earn (SAYE) share options
  • PRSI and USC on appropriations from approved share option schemes
  • PRSI on the exercise on non-SAYE share options

Where liabilities are not settled by the June P30 deadline interest will be calculated from the original due date NOT the extended deadline.

Income on gains arising from the exercise of share options remains outside the PAYE system.

Stuart Meharg Chartered Accountant welcomes this sensible approach. Too often are changes made to the tax code without proper consideration of how it will impact on businesses, especially fiduciary taxes such a PAYE and VAT where the employer collects the taxes on behalf of Revenue.

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