Share Based Remuneration
11 April 2011
Finance Act 2011 Changes
Further details of the new rules have been confirmed by Revenue, together with transitional arrangements will allow employers a grace period to put appropriate structures in place to deal with the recent changes. We set out a summary of the latest Revenue guidance below
Operation of the PAYE Collection Mechanism / PRSI / USC
The Revenue have confirmed that the charge to PRSI (both Employer and Employee) will not apply where share-based remuneration was the subject of a written agreement entered into between the eployer and employee before 1 January 2011.
Therefore, the PRSI charges will only apply to share-based remuneration arising under agreements entered into on or after 1 January 2011.
Regardless of when agreements were entered into, share-based remuneration, including share options, remains chargeable to the Universal Social Charge form 1 January 2011.
Lee Way / Flexibility / PAYE
Special measures have been put in place by Revenue and the Department of Social Protection. They have confirmed that they will not seek to impose interest and penalties where any unresolved liabilities are settled before the P30 filing date for June, i.e. 14 July 2011 (or 23 July 2011 for online filing.)
Share Options (RTSO)
The Finance Act 2011 also declares that income tax on gains arising from the exercise of share options, known as ‘relevant tax on share options’ (RTSO) continues to be payable within 30 days of the exercise of an option but it also continues to remain outside of the PAYE collection system. The employee is thus responsible for the payment of this tax, which should be paid when filing the Form RTSO1. The Revenue have confirmed that USC on such gains should be paid within 30 days of the exercise of an option.
For more information, please get in touch with the tax team at 01 496 5388 or e-mail tax@bakertillyrg.ie
