The Finance Bill 2017 was presented in the Dáil on 17 October 2017 and it is expected to become law by late December. The Bill introduces a number of measures of interest to employees and employers, as outlined below.
Introduction of Key Employee Engagement Programme (KEEP)
As signalled in the Budget announcement, provision is to be made for the introduction of a new relief, the Key Employee Engagement Programme, for qualifying share options granted to employees of certain small to medium enterprises.
This programme will be available for share options granted to employees of qualifying unquoted companies from 1 January 2018 to 31 December 2023.
To qualify for relief, the share option must be granted at no less than market value. The share option must be held for at least one year, and the share option must be exercised within ten years of the grant to avail of the relief.
Gains realised on the exercise of a share option by employees of qualifying small to medium enterprises will be exempt from income tax, PRSI and USC, but will be subject to capital gains tax on any subsequent disposal.
Tax treatment of employer-provided loans
The Bill introduces measures to prevent tax avoidance in respect of employer-provided loans. The proposals seek to ensure that a taxable benefit arises in any year where an employee pays interest on an employer-provided loan at a rate less than the specified rate, and includes within its scope loans provided by an employer to an employee's spouse or civil partner.
The difference between the amount of interest paid by the employee and the amount that would have been payable if interest had been charged at the specified rate will be taxable as a benefit in kind (BIK).
PAYE modernisation programme
Changes are to be introduced from 1 January 2019 arising from the ongoing reform of the PAYE system, which will result in new processes for employers. In particular, employers will be required to update and report on the pay and deductions of their employees to Revenue on an ongoing basis. The intention behind the introduction of real time reporting by employers is to ensure that automatic reconciliations of an employee's tax position can be carried through the year so that employees will receive their full benefits during that year.
Further measures, to come into force from 1 January 2018, provide for changes to the basis on which PAYE taxpayers will be liable to pay income tax, from an earnings basis to a receipts basis.
Tax treatment of provision of electric vehicles and charging points by employers
The Finance Bill provides for benefit-in-kind exemptions for the provision of electric cars and vans to employees or directors, and for expenses incurred by an employer in providing facilities on their business premises for the electric charging of vehicles of employees or directors.
Tax treatment of benefits for employees of health or dental insurers
Where an employee of a health or dental insurer receives a health or dental insurance policy in the course of his or her employment, any discount received on the policy will be treated as a taxable emolument for the employee. This will also apply to free or discounted policies paid to family members of such an employee.