Here is a summary list (no real surprises) of the #budget11 PAYE changes that will affect payroll, payroll processers, payroll software developers and of course, PAYE workers.
All Tax Credits and Cut-Off Points (Tax Bands) will reduce by 10%
- This has no implications for software developers but PAYE employees will be interested to see the tax calculation on their current pay with these new rates.
Removal of PRSI Ceiling
- This will need to be programmed in payroll software systems and similarly will affect employees depending on their level of income. The rate for PRSI class S (self employed) increases from 3% to 4%.
The current Income Levy and Health Levy will be combined into a single Universal Social Charge (USC)
- Employees will have many questions about the calculations around this new charge and how it will impact their take-home pay.
- Developers will need to implement the USC rules and modify any areas of their applications, such as reporting and journals, which will now need to highlight the USC.
- The introduction of the USC will result in changes to standard forms and electronic filing such as P35, P45, P60 and the issue of USC Certificates (where Income Levy Certificates were previously given.)
The Public Service Pension-related Deduction (PRD) will now be subject to employee PRSI and the new USC
- This will also have implications for software developers and a new tax calculation for Public Service workers.
Reliefs – many reliefs have been amended or removed most notably “pensions”
- This will affect employees in many different ways depending on their current entitlements and pension contributions. It requires programming changes for software developers where employee pension, AVCs, PRSAs, etc. are no longer exempt from employee PRSI. A number of the reliefs will be automatically adjusted when employees are issued with their new tax certificate for 2011 but others will need to be reconfigured within payroll applications.
- The latest news about the planned Parking Levy is that it will not take effect until April 2011 at the earliest.
Jefferson Payroll will be updating its support information and documentation as well as providing tax calculation samples within its client support websites over the coming weeks. Watch this space!