As we head into the new tax year, 2023, there are many changes that are coming in to effect as a result of Budget 2023. It is important that, you as an employer be aware of these changes from a Revenue perspective and an employee rights perspective as a number of them will affect all employers in some way. Please familiarise yourself with the changes and contact us if you require more information. Below is a brief summary of some of the changes.
Tax Credit and rate band changes:
| Annual Tax Credits: | 2022 | 2023 |
| Single Personal Tax Credit | €1,700 | €1,775 |
| Married | €3,400 | €3,550 |
| Employee Tax Credit | €1,700 | €1,775 |
| Home Carer Tax Credit | €1,600 | €1,700 |
| Standard Rate Band: | 2022 | 2023 |
| Single/widowed/surviving Civil Partner | €36,800 | €40,000 |
| Married/Civil Partnership | €36,800 | €49,000 |
*€500 Rent tax credit subject to no other rent supports being paid
USC Changes:
- No changes to rates applied
- Exemption level remains at €13,000
- Rate band 2 increased by €1,625 per year in line with increase in national minimum wage
- Rate band 3 decreased by €1,625
| Rate Bands | Rate |
| Up to €12,012 | 0.5% |
| Next €10,908 | 2% |
| Next €47,124 | 4.5% |
| Balance | 8% |
PRSI Changes:
Weekly threshold for higher rate of ER PRSI under class A increased from €410 to €441 from 1st January 2023
Minimum Wage:
The national minimum hourly rate will become €11.30 on 1 st January 2023
Small Benefit Exemption:
From 2022
- Increased from €500 to €1,000
- Can be given up to twice a year (aggregate value can’t exceed €1,000)
BIK Changes
BIK on Company Vehicles in 2023:
Cars
Currently based on OMV and annual business kms. From 1 st January 2023 also based on CO2 emissions
- New system
- 5 bands based on CO2 emissions (A-E)
- 4 BIK rates within each band linked to annual kms
- Rates will range from 9% to 37.5%
- Mileage thresholds will increase
Vans
BIK increase from 5% to 8% of OMV
BIK Rates from January 2023 (Cars)
| Annual Business KMs | Vehicle Categories | ||||
| A | B | C | D | E | |
| CO2 Emissions - CO2 g per km | 0-59 | 59-99 | 100-139 | 140-179 | 180+ |
| % of OMV | |||||
| 0-26,000 | 22.50 | 26.50 | 30.00 | 33.75 | 37.50 |
| 26,001-39000 | 18.00 | 21.00 | 24.00 | 27.00 | 30.00 |
| 39001-52,000 | 13.50 | 15.75 | 18.00 | 20.25 | 22.50 |
| 52,000 + | 9.00 | 10.50 | 12.00 | 13.50 | 15.00 |
Example:
| Vehicle Type | OMV | Annual Business KM | Co2 Emissions | Vehicle Category |
| Audi A6 Tdi | €54,450 | Minimal | 142g per km | D |
Example:
| 2022 | 2023 | Difference | |
| OMV | €54,450.00 | €54,450.00 | |
| % BIK (based on band D in 2023) | 30.00% | 33.75% | |
| Notional pay | €16,335.00 | €18,376.87 | €2,041.87 |
| Liabilities due (higher rate) | €8,494.20 | €9,555.97 | €1,061.77 = €20.42 per week |
| Employer PRSI | €1,805.02 | €2,030.64 | €225.62 |
Changes to the current BIK Exemption/Partial Relief for Electric Vehicles
Effective to 31 December 2022, a full exemption applies where the Original Market Value (‘OMV’) of an electric vehicle was €50,000 or less, with partial relief up to €50,000 if the OMV exceeded that amount.
Whilst BIK relief is extended to cover the period from 1 January 2023 to 31 December 2025, it is limited to partial relief on the OMV to be tapered away over time as follows:
- Reduction of OMV by €35,000 in 2023
- Reduction of OMV by €20,000 in 2024
- Reduction of OMV by €10,000 in 2025
We have noted an example below for ease of reference.
Example Electric Car
| 2022 | 2023 | 2024 | 2025 | |
| OMV | €75,000 | €75,000 | €75,000 | €75,000 |
| Less Exemption | €50,000 | Nil | Nil | Nil |
| Reduction in OMV | Nil | €35,000 | €20,000 | €10,000 |
| OMV for BIK | €25,000 | €40,000 | €55,000 | €65,000 |
| Rate of BIK | 30% | 22.50% | 22.50% | 22.50% |
| Notional Pay | €7,500 | €9,000 | €12,375 | €14,625 |
| Liabilities due(higher rate) | €3,900 | €4,680 | €6,435 | €7,605 |
| Net Pay – Year on Year decrease | - | -€780 | -€1,755 | -€1,170 |
Gender Pay Gap Reporting
- Came into effect in May 2022
- Requires employers to report information on pay by reference to gender to determine if a gap exists
Who is obliged to report?
- Public & private sectors with the required minimum number of employees on the relevant date (snapshot date)
- To be published on company website 6 months after snapshot date – e.g snapshot date 30th June to be published by 30th December.
- Reporting obligations being phased in as follows:
| Reporting Year | Number if employees employed on the Relevant date |
| 2022 | 250 or more |
| 2023 | 250 or more |
| 2024 | 150 or more |
| 2025 and subsequent years | 50 or more |
Statutory Sick Pay:
The Statutory Sick Pay Bill will come into effect from 1 st January 2023, meaning an employee in Ireland will have legal rights under employment law to be paid whilst on sick leave. This will be phased in over a four-year period as follows:
- Three (3) days per year in 2023
- Five (5) days payable in 2024
- Seven (7) days payable in 2025
- Ten (10) days payable in 2026
To qualify for statutory sick pay the employee must:
- Have at least 13 weeks continuous service
- Provide a medical certified by a GP Re-employed within 26 weeks (aggregate both periods)
Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110
The daily earnings threshold of €110 is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16, meaning anyone earning over this will get the maximum sick pay of €110 per day
Tips & Gratuities:
- Payment of Wages (Amendment) (Tips and Gratuities) Act 2022
- Commenced 1 st December 2022
Main provisions
- Amends the definition of wages to exclude tips, gratuities and service charges from the definition of wages.
- Requires employers to distribute electronic tips or gratuities (and service charges) to employees in a fair manner. Service charges (whether paid by the customer electronically or in cash) will be treated as if they were an electronic tip or gratuity.
Prohibits employers from:
- Using electronic tips and gratuities (or service charges) to make up part of an employee’s contractual wages,
- Deducting electronic tips and gratuities (or service charges) from an employee’s contractual pay,
- Requires employers to issue a statement to an employee within 10 days of any such distribution of tips or gratuities, outlining the total amount of tips or gratuities distributed by the employer for the period to which the statement relates, and the amount distributed to that employee.
- Requires employers (or operators of websites or apps who engage contract workers) to clearly display a Tips and Gratuities Notice.
The Terms of Employment (Information) Act 1994 was amended so employers will have to provide information to employees on how tips, gratuities and service charges are distributed in the written statement of core terms of employment within 5 days of commencing work.
** Tips paid by employer are taxable – employees should declare tips received personally **
Pension Auto Enrolment:
- New savings and investment scheme with financial payment on retirement in addition to state pension
- Aim to provide as many people as possible with access to pension scheme
- Aim to be developed in 2023 with view to accepting contributions in 2024
- Available to anyone aged 23 and 60 who earn more than €20,000 per year across all employments who are not currently a member of a workplace pension scheme – these will be automatically enrolled in the scheme
- Employees earning below the income threshold will be able to opt-in to scheme
Further information on pension auto enrolment can be provided by our wealth management team.
Mandatory reporting requirements (likely to begin in 2024):
Mandatory reporting of non-taxable items will be introduced on a phased basis.
May include:
- Travel & Subsistence
- Small benefit vouchers
- Tax – free employer contribution (€3.20 per day) towards Remote Working expenses
Contact Us
To discuss these updates in line with your business please contact Mary Byrne, Payroll Manager or Yvonne Clarke, HR Solutions Manager on (090) 648 0600.
