Local Property Tax deduction through payroll

The Local Property Tax will come into effect from 1st July 2013 may be deducted through payroll.  Local Property Tax is payable on the market value of a residential property located within the state. It is up to each individual to determine their liability to Local Property Tax using the market value of their home.

Property Tax

For 2013 a half yearly charge will apply and an annual charge will apply for 2014 and subsequent years. Revenue will contact residential property owners in writing in March 2013 and will include an explanatory booklet as well as LPT return for completion. 

 Revenue will have a range of payment methods available to pay LPT. 

It can be paid in full or in equal instalments from July 2013 to 31st December 2013 by Debit/Credit Card, Bank Single Debit or Cash Payments through certain providers. 

 Deduction through the payroll:  The finance act provides for 2 circumstances under which the LPT may be deducted from an employee’s salary/occupational pension as follows:

 1. Where the individual elects in his LPT return to Revenue to have all or part of his LPT deducted from his salary/occupational pension or

2. Where Revenue enforce the collection of LPT via deduction from net pay/pension in any circumstance where the individual otherwise fails to make an LPT return or fails to pay the liability by another means.

 Where an employee opts to pay the LPT by deduction from salary Revenue will notify his employer of the amount due. We can only take instruction from Revenue and not from the employee themselves. 

 Where the LPT is collected through the payroll, it is proposed that the employer will be informed of the amount of LPT to be deducted via the tax credit certificate, which is to be amended to include LPT. Where applicable, the LPT should be deducted from an employee’s Net emoluments. (Net emoluments is the amount before voluntary deductions, whereas the employee’s net take home pay is the amount after all deductions). 

 The LPT should be deducted equally over each remaining pay periods in the tax year 2013. Where an employee has insufficient pay in a particular pay period to meet the full LPT liability, the employer is only required to deduct the amount of LPT as the payment will permit.

 Where the employee is on unpaid leave for a period of time and the employer is unable to deduct any LPT from employee, the employer is not responsible for paying over the LPT to Revenue on behalf of the employee. Instead the employer should try and collect the outstanding amount as soon as reasonably practicable on the employee’s return to work, however if the unpaid leave is at the end of the year the employer will not be able to collect the LPT through the payroll. In this instance any underpayment of LPT will be a matter for Revenue to address with the individual. Where the employer is unable to collect the LPT from the employee on any particular pay period because of insufficient net emoluments, the employer will be obliged to notify Revenue of the amount of LPT which he was unable to deduct for that period. It remains to be seen how this will be administered. 

 Where the employer is required to deduct LPT from an employee, the employer will be accountable for paying that amount over to the Collector General on a monthly or quarterly basis on the P30 return. The P30 return will be amended to record an entry for LPT. The amount returned by the employer on the P30 will be the overall amount deducted from all employees in the calendar month or quarterly covered by the P30.

 Where an employee ceases employment before the full amount of LPT is deducted, the employer is required to notify Revenue and it is proposed that the P45 will be amended to include an entry for the actual amount of LPT deducted from an employee up to his date of leaving.

Where an employer fails:

1. To remit the LPT to Revenue

2. To notify Revenue of the fact that the employee had insufficient net emoluments to meet the liability

3. To remit the amount or remits an amount which is less than the amount stated on the employee’s P45 Revenue may issue a demand for the payment.

 It is difficult to see how this can be administered, especially as the amount of LPT returned on a P30 is the combined amount for all employees. It would appear that this may not come to light until the end of the tax year when the P35 is submitted by the employer indicating the liability of each individual employee.

 Payroll has to set up a deduction specifically for LPT and show this on the employee’s payslips each pay period.

 The team at Paycheck Plus are happy to assist you with any questions or queries you have in respect of this change.  Contact our PayrollTeam@paycheckplus.ie or call us on +353 (0)41 686 3000.