*** Bands and Rates Revised on the 7th of April 2009 ***
The Askaboutmoney Income Levy FAQ – Work in progress – Revision 6
Last Updated 14th January 2009
This is the Askaboutmoney Income Levy FAQ, more detail can be found in http://www.revenue.ie/en/practitioner/law/income-levy.pdf. This FAO has no legal standing and no responsibility of any kind will be taken for its contents.
Q. What is the Income Levy?
A. It is a temporary tax on all income (with some exceptions) to prop up the government’s tax take. It will come into effect on the 1 January and is payable on gross income before relief for capital allowances, losses or pension.
Q. What are the Bands and Rates for the Income Levy?
A. Once you income exceeds the Exempt Thresholds the following applies:
1% on first €100,100
2% on next €150,020
3% on balance
For more detail see the rest of the FAO.
Q. How long will the Levy last?
A. Previous temporary taxes have proved to be very long lived.
Q. Why have the Government introduced an Income Levy.
A. They relied too much on a temporary increase in Stamp Duty and Construction Sector VAT Returns. These windfalls have now dried up, but public sector day to day spending has risen greatly in the meantime, relying on this short term additional money.
Q. How much will it cost the country to implement the Income Levy.
A. Millions, it would have been much cheaper and easier to increase PAYE and/or PRSI etc.
Q. Is there any advantage in bringing in an additional Levy to increasing PAYE and/or PRSI?
A. Yes. The Levy is calculated on Gross Income before any fancy deductions/tax right offs etc.
Q. Why not remove the Employee’s Upper Earnings PRSI limit?
A. It will not bring in as much money, but may yet happen.
Q. Will the Income Levy bring in enough money to cover the short fall in Taxes.
A. No. Not by a long way.
How it all works
Q. What Income falls under the Income Levy.
A. From the Finance Act Memo: http://www.finance.gov.ie/documents/publications/financeno.2%20bill%202008/FinNo.2memo.pdf
The levy will apply to all income in a similar manner to the Tax Acts, but will be applied before granting relief for pension contributions or deductions for capital allowances.
Social welfare payments and a number of similar type payments made by other Departments, as well as similar payments from other States will be excluded.
There will be an age related exemption for persons aged over 65 years who have a gross income of less than \20,000 with a provision for double that limit for a married couple.
An exemption threshold of \18,304 will apply so as to exclude those on low incomes.
A.
A. You may be if:
A. The following exemption thresholds apply. If your total Leviable income is within them you are exempt:
A. 18,304 / 52 = €352 per week, which is PRSI Class AX. This is to match the start of the Income Levy deduction with Employee PRSI.
Note: For Monthly Paid Employees, the Income Levy starts at €1,526, while Employer PRSI starts at €1,525.
Q. Why do the 65s and over’s get better exemption thresholds.
A. Sweetener after the Medical Card debacle.
Q. What are the Bands and Rates for the Income Levy?
A. Once you income exceeds the Exempt Thresholds the following applies:
A. No. Except for exemption threshold for married couples 65 or over, the Income Levy is “individualised”.
How is it calculated - Part 1 : Yearly.
Q. How is it calculated - Part 1 : Yearly.
A. For a year it is calculated like so:
Leviable Income = €17,000, Age = 20, Marital Status = NA.
Levy = €0, income in the ‘age < 65’ exemption threshold.
Leviable Income = €20,000, Age = 70, Marital Status = Widow
Levy = €0, income in the ‘age >= 65 & Single’ exemption threshold.
Leviable Income = €20,001, Age = 70, Marital Status = Widow
Levy = €200.01, income above the ’age >= 65 & Single’ exemption threshold and in the 1% band.
Leviable Income = €30,000, Age = 70, Marital Status = Married
Levy = €0, income in the ‘age >= 65 & Married’ exemption threshold.
Leviable Income = €50,000, Age = 40, Marital Status = NA.
Levy = €500, income above the ‘age < 65’ exemption thresholds and in the 1% band.
Leviable Income = €50,000, Age = 66, Marital Status = Single.
Levy = €500, income above the ’age >= 65 & Single’ exemption threshold and in the 1% band.
Leviable Income = €150,000, Age = 50, Marital Status = NA.
Levy on €100,100 @ 1% = 1,001.00
Levy on €49,900 @ 2%= €998
Total Levy = 1999, income above the ‘age < 65’ exemption threshold and in the 1% & 2% bands.
Leviable Income = €300,000, Age =60, Marital Status = NA.
Levy on €100,100 @ 1% = 1,001.00
Levy on €150,020 @ 2%= €3,000.40
Levy on €49,880 @ 3% = €1,496.40
Total Levy = €5,497.80, income above the ‘age < 65’ exemption threshold and in the 1%, 2% & 3% bands.
- Exemption Threshold (Under 65) - 15,028
- Exemption Threshold (65 and over) - 20,000
- Middle Rate Threshold - 75,036
- Higher Rate Threshold - 174,980
- Lower Rate - 2%
- Middle Rate - 4%
- Higher Rate - 6%
The Askaboutmoney Income Levy FAQ – Work in progress – Revision 6
Last Updated 14th January 2009
This is the Askaboutmoney Income Levy FAQ, more detail can be found in http://www.revenue.ie/en/practitioner/law/income-levy.pdf. This FAO has no legal standing and no responsibility of any kind will be taken for its contents.
Q. What is the Income Levy?
A. It is a temporary tax on all income (with some exceptions) to prop up the government’s tax take. It will come into effect on the 1 January and is payable on gross income before relief for capital allowances, losses or pension.
Q. What are the Bands and Rates for the Income Levy?
A. Once you income exceeds the Exempt Thresholds the following applies:
1% on first €100,100
2% on next €150,020
3% on balance
For more detail see the rest of the FAO.
Q. How long will the Levy last?
A. Previous temporary taxes have proved to be very long lived.
Q. Why have the Government introduced an Income Levy.
A. They relied too much on a temporary increase in Stamp Duty and Construction Sector VAT Returns. These windfalls have now dried up, but public sector day to day spending has risen greatly in the meantime, relying on this short term additional money.
Q. How much will it cost the country to implement the Income Levy.
A. Millions, it would have been much cheaper and easier to increase PAYE and/or PRSI etc.
Q. Is there any advantage in bringing in an additional Levy to increasing PAYE and/or PRSI?
A. Yes. The Levy is calculated on Gross Income before any fancy deductions/tax right offs etc.
Q. Why not remove the Employee’s Upper Earnings PRSI limit?
A. It will not bring in as much money, but may yet happen.
Q. Will the Income Levy bring in enough money to cover the short fall in Taxes.
A. No. Not by a long way.
How it all works
Q. What Income falls under the Income Levy.
A. From the Finance Act Memo: http://www.finance.gov.ie/documents/publications/financeno.2%20bill%202008/FinNo.2memo.pdf
The levy will apply to all income in a similar manner to the Tax Acts, but will be applied before granting relief for pension contributions or deductions for capital allowances.
Social welfare payments and a number of similar type payments made by other Departments, as well as similar payments from other States will be excluded.
There will be an age related exemption for persons aged over 65 years who have a gross income of less than \20,000 with a provision for double that limit for a married couple.
An exemption threshold of \18,304 will apply so as to exclude those on low incomes.
- PAYE Income.
All income including BIK (Notional Pay) before Employee Pension is deducted.
The following are exempt:
Salary Sacrifice for Annual Travel Tickets. Profit Sharing, Bicycle Scheme and the ‘€250 BIK free’
Employer Pension – Is not included in Leviable Income calculation.
The following are exempt:
Salary Sacrifice for Annual Travel Tickets. Profit Sharing, Bicycle Scheme and the ‘€250 BIK free’
Employer Pension – Is not included in Leviable Income calculation.
- Rental Income.
Unclear: “It is on Gross Income before capital allowances, losses or pension contributions.” How this effects Section 23 properties etc is un clear
- Other Incomes
Everything that is not in Appendex A and B of [broken link removed].
Q. What Income does not fall under the Levy?
A.
- All Social Welfare payments from Ireland and abroad.
- Payments made in lieu of Social Werfare Payments eg:
- Community Employment (C.E.) Schemes.
- Back to Education Allowance.
- Back to Education Allowance.
See Appendix A of [broken link removed] for a full listing of social welfare exemptions.
- Income subject to DIRT.
- Child Benefit.
- Rent a Room Scheme.
- Payments in Respect to Redundancy, which are not normally taxed.
- Childcare Service Relief.
- Income below the Exemption Thresholds, see section below.
- For a full listing see Appendix B of [broken link removed].
A. You may be if:
- Your income for the year does not exceed your Exemption Threshold.
- You hold a full Medical Card.
- Your income is from Social Welfare payments.
A. The following exemption thresholds apply. If your total Leviable income is within them you are exempt:
- Age 0 to 64 single or married - Up to and including €18,304 @ 0%
- Age 65 single or spouse working - Up to and including €20,000 @ 0%
- Age 65 married and one income - Up to and including €40,000 @ 0%
A. 18,304 / 52 = €352 per week, which is PRSI Class AX. This is to match the start of the Income Levy deduction with Employee PRSI.
Note: For Monthly Paid Employees, the Income Levy starts at €1,526, while Employer PRSI starts at €1,525.
Q. Why do the 65s and over’s get better exemption thresholds.
A. Sweetener after the Medical Card debacle.
Q. What are the Bands and Rates for the Income Levy?
A. Once you income exceeds the Exempt Thresholds the following applies:
- Up to and including €100,100 @ 1%
- Above €100,100 and up to and including €250,120 @ 2%
- Above €250,120 @ 3%
A. No. Except for exemption threshold for married couples 65 or over, the Income Levy is “individualised”.
How is it calculated - Part 1 : Yearly.
Q. How is it calculated - Part 1 : Yearly.
A. For a year it is calculated like so:
Leviable Income = €17,000, Age = 20, Marital Status = NA.
Levy = €0, income in the ‘age < 65’ exemption threshold.
Leviable Income = €20,000, Age = 70, Marital Status = Widow
Levy = €0, income in the ‘age >= 65 & Single’ exemption threshold.
Leviable Income = €20,001, Age = 70, Marital Status = Widow
Levy = €200.01, income above the ’age >= 65 & Single’ exemption threshold and in the 1% band.
Leviable Income = €30,000, Age = 70, Marital Status = Married
Levy = €0, income in the ‘age >= 65 & Married’ exemption threshold.
Leviable Income = €50,000, Age = 40, Marital Status = NA.
Levy = €500, income above the ‘age < 65’ exemption thresholds and in the 1% band.
Leviable Income = €50,000, Age = 66, Marital Status = Single.
Levy = €500, income above the ’age >= 65 & Single’ exemption threshold and in the 1% band.
Leviable Income = €150,000, Age = 50, Marital Status = NA.
Levy on €100,100 @ 1% = 1,001.00
Levy on €49,900 @ 2%= €998
Total Levy = 1999, income above the ‘age < 65’ exemption threshold and in the 1% & 2% bands.
Leviable Income = €300,000, Age =60, Marital Status = NA.
Levy on €100,100 @ 1% = 1,001.00
Levy on €150,020 @ 2%= €3,000.40
Levy on €49,880 @ 3% = €1,496.40
Total Levy = €5,497.80, income above the ‘age < 65’ exemption threshold and in the 1%, 2% & 3% bands.
