Tax Free Payments to Employees New Reporting Requirements

December 6, 2023

Despite employer resistance and lobbying by the professional bodies Revenue seem to be proceeding with the introduction of employer reporting of the payment of expenses and small benefits to employees with effect from 1 January 2024.  The measure was introduced in Finance Act 2022 and was subject to a commencement order to give time for Revenue to consult with the stakeholders.  The commencement order has not yet issued by the Minister for Finance but is expected to be in place prior to 1 January 2024.

From 1 January employers will be required to report to Revenue in advance of making any of the following payments to employees:

  • Travel and subsistence expenses
  • Small benefit exemption
  • Remote working daily allowance of €3.20 per day

Currently, an employer must report the payment of salary or wages to an employee on ROS on a real time basis and this requirement is being increased to provide for the declaration of certain expenses and payments made to employees prior to the payment being made.

The benefits will be reportable via ROS and many of the payroll software providers are increasing the capabilities of their software to allow for the reporting of benefits through payroll systems.

Travel and Subsistence

As the payment of travel and subsistence to an employee tax free is subject to certain conditions, the employer should confirm for themselves that such conditions are met for the benefit to be paid tax free to the employee. 

The categories for reportable benefits for travel and subsistence are:

  • Travel vouched
  • Travel unvouched
  • Subsistence vouched
  • Subsistence unvouched
  • Site based employees including “country money”
  • Emergency travel
  • Eating on site

Revenue have advised if a company credit card or a prepaid card is used by an employee to pay for expenses then this is currently not reportable.  In addition, if fuel or motor tax are paid directly by the employer there is no requirement to report these benefits.  However, where the employee directly incurs any travel or subsistence expenses and these are reimbursed by the employer to the employee, whether vouched or unvouched, such payments made to the employee must be reported to Revenue on ROS at the time the payment is made to the employee or in advance of making the payment.  The information to be provided to Revenue is the amount to be paid and the date of payment. 

Small Benefits Voucher

An employee is entitled to receive a small benefit or a voucher up to two times per year up to a maximum total value of €1,000.  Revenue, in their manual, provide an example of an employee receiving an Easter egg in April and two vouchers over the course of the tax year, only the first two would qualify for the small benefits exemption and are required to be reported to Revenue.  The third item, say the second voucher, is taxable in full and subject to PAYE, USC and PRSI.  An employer will need to be very careful regarding any benefits provided to an employee during the tax year so as to not fall foul of these rules.

You should also note that all benefits reported to Revenue will be available for the employee to view on their MyAccount.  The types of expenses to be reported will likely be expanded in the future.

If you require any further information on these enhanced reporting requirements, please do not hesitate to contact us.

This summary is intended as a general guide. No action should be taken without obtaining professional taxation advice. If you require any advice on the above, please do not hesitate to contact Purcell McQuillan Tax Partners Ltd on 01 668 2700 or email your usual PMQ contact.

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