Local Property Tax Bulletin 4
Key Actions for Employers
It is expected that Revenue will begin issuing revised Employer Tax Credit Certificates (P2Cs) incorporating Local Property Tax (LPT) in mid June 2013. Deductions of LPT at source from wages and salaries will then begin from 1 July 2013.
In this, the fourth in our series of bulletins on the LPT, we highlight some important things for members to be aware of, both in their own capacity as employers and in their role as advisers to clients who are employers.
Revenue have issued comprehensive guidance on LPT issues for employers, which includes a number of worked examples. Therefore, this bulletin focuses on the key points for members and employers to be aware of in preparing for and operating this new payroll deduction.
Is my payroll software up to date?
Employers should confirm with their payroll software provider as soon as possible that their package will be updated in time to facilitate LPT deductions from wages/salaries from 1 July 2013.
What if an employee objects to the deduction of LPT?
Where an employer receives a P2C incorporating LPT in respect of an employee, the employer has a statutory obligation to collect the total LPT stated on the P2C and must inform the employee accordingly.
How do I calculate how much LPT to deduct?
LPT should be deducted by spreading it evenly over the pay periods occurring in the period from 1 July 2013 to 31 December 2013. For example, where an LPT liability of €202 arises for 2013 and the employee is paid monthly, then the amount to be deducted over the period July-December 2013 is €33.66 per month.
What if I have already run my July payroll by the time I get the revised P2C?
An employer may already have run the July payroll for monthly-paid employees by the time they receive the revised P2C in June 2013. In that case, the LPT deduction should commence for the August payroll. Instead of the LPT amount advised on the P2C being collected over 6 months (July-December 2013), it should be collected in equal instalments over 5 months (August-December 2013).
What if my employee asks me to stop deducting LPT?
Until such time as an employer receives a P2C showing ‘LPT: 0.00’, he/she is obliged to continue deducting the amount of LPT stated on the P2C. If an employee wishes to arrange for a different method of LPT payment, the employer should advise the employee to contact Revenue to do so. If the employee agrees a different method of payment with Revenue, a revised P2C showing ‘LPT: 0.00’ will issue. The employer should then stop deducting LPT from salary.
What if my employee disagrees with the amount of LPT on the P2C?
The valuation of an individual’s property is a matter between the individual and Revenue. If an employee disagrees with the amount of LPT stated on the P2C, the employer should advise the employee to contact Revenue. Until such time as a revised P2C is received, the employer is obliged to deduct the amount of LPT advised on the current P2C.
Should my employees be concerned about confidentiality?
The P2Cs will only indicate the total amount of LPT to be deducted from the employee’s emoluments. It will not be evident from the P2C what the value of the employee’s property or properties are, how many properties the employee owns, or whether deduction at source arises at the option of the employee or due to Revenue enforcement action.
Will Revenue be updating their forms for LPT?
Employers will be required to account for and remit the deducted LPT to Revenue on Form P30, to which a new field for LPT will be added.
Revisions will be made to other existing Revenue forms to cater for LPT deducted from emoluments. This will involve amendments to Form P35 (end of year declaration), Form P35L (list of particulars in respect of each employee), Form P60 (employee certificate of pay and deductions) and Form P45 (cessation certificate).
Should I deduct LPT for a new employee?
The employer should not deduct LPT until such time as they receive a P2C showing LPT is to be deducted in the employment, even where a new employee gives an employer a P45 showing an amount for LPT deducted. If the new employee asks the employer to deduct LPT from their wages/salary, the employer should advise the employee to contact Revenue to arrange this.
Should I deduct LPT for employees on sick leave or maternity leave?
Where employees are absent from work on sick leave or maternity leave during the year, the manner in which LPT will be deducted will depend on whether the employee is paid or unpaid while absent.
Where the employee is receiving either full or partial salary, the employer should deduct LPT as normal. If the employee is not paid while absent, no LPT should be deducted. When the employee returns to work the amount of weekly/monthly LPT to be deducted is adjusted to ensure the full amount of LPT is collected by year end. A worked example is provided in Revenue’s guidance.
What if an employee has insufficient wages/salary from which to deduct LPT?
Where an employer is unable to deduct the required amount of LPT due to insufficient wages/salary on a particular payday, the employer should do the following:
1. Make up the under-deduction later in the period covered by the P2C, as soon
2. Notify Revenue that they were unable to deduct the required amount, and
3. Inform Revenue of the amount which they were unable to deduct.
If the employer cannot make up the under-deduction in the period, he/she should notify Revenue as soon as he/she becomes aware of this.
Do I need to keep records in relation to the LPT?
Employers are obliged to keep records in relation to:
The payment of net emoluments to employees in respect of whom LPT has been deducted,
The deduction of LPT from the employees’ emoluments, and
The remittance of LPT deducted to Revenue.
These records should be kept for a period of 6 years from the end of the year to which they relate.
Should I refund to my employees any overpayments of LPT?
Employers are not to make any refunds of overpaid LPT to employees. Revenue will deal with all refunds of LPT.
What are the penalties if I do not comply with my LPT obligations?
Where an employer fails to send a Form P35 or Form P45 to Revenue on time, indicating the amount of LPT deducted, the employer will be liable to a penalty of €500 per month for each month during which the form remains outstanding, subject to a maximum penalty of €3,000. Where the employer is a body of persons, the secretary of that body will also be liable to a separate penalty of €2,000.
Where an employer fails to remit LPT deducted to Revenue, Revenue may also recover that LPT from the employer.
A fifth bulletin in this LPT series, dealing with the specific LPT issues for the self-employed, will be issued in the near future. To read our previous bulletins, please refer to our dedicated LPT webpage.
Institute President Highlights LPT Data Collection – Implications for Advisers and Taxpayers
An article by Institute President Martin Phelan featured recently in the Sunday Business Post. The article focused on the level of data and intelligence Revenue will glean from the LPT returns and the possible implications of this for taxpayers. The President advised taxpayers not to stick their head in the sand on the LPT issue and if they have issues of concern to talk to a tax adviser now. The article is available here. Subscription is required to access this article.