Income Levy Q

deepriver

Hi

I have an employee who was paid €9,900 from 1 Jan 2009 to end of Aug 2009.

In September the employee recieved a bonus of €11,500.

Total payroll for the employee is €21, 400 until September when employment ceased.

Between Jan and Aug 2009 I did not deduct any income levy from their pay, as their income was under the €15,028 threshold.

However the September payment pushed them above this threshold.

Q. What Income Levy should the employee pay?

A. 1% on all earnings from Jan to May 2009 and then 2% on all earnings June to September?

B. 2% on September bonus of €11,500

C. Other

thanks!

billyfink

If the employee is paid monthly, then you should apply the 4% rate of income levy to the bonus in Sept.

As the employee has changed employment in the year, then Revenue will deal with any overpayment of the Income Levy when the year is reviewed at 31 December 2009.

More info on the Income Levy can be found here http://www.revenue.ie/en/spotlights/income-levy.html

deepriver

thanks for that reply

so levy calculations are based on wage/payroll intervals

for the p35 return then, since the employee over the total employment period has exceeded the examption threshold, should I apply an income levy to all the salary paid?

the employee has moved on to other employment since Aug

billyfink

Yep, Income Levy is calculated on whats known as a week1/month1 basis, similar to the way PRSI is calculated.

You should only apply the Income Levy to the bonus paid in Sept as this was the only month that the employee exceeded the exemption threshold (Presuming that the €9,900 was earned evenly over the first 8 months). As the employee has moved on to other employment, you don't need to do anything else, Revenue "should" deal with overpayment for the year.