How to get the most from your salary
Since last Monday, people have been allowed to return to the workplace. Many companies are taking a phased approach, while for some workers Covid has proven too much of a challenge and they will look to relocate elsewhere.
Whether you are in the workforce or back in the office, there are many ways you and your employer can improve your financial situation. I am looking at the salary, benefits and protocols this week.
Working from home has been a game-changer for many; for others a test. In terms of finances, the last budget reinforced the relief of the FMH which allows either your employer to pay € 3.20 tax free for the use of your electricity and your wifi, or you can claim 10pc energy bills and 30pc broadband income tax bills. discount.
Salaries, bonuses and other payments are all taxed at 20% or 40%, along with salary-related social insurance (PRSI) and universal social charge (USC), and are only alleviated by personal allowances, employee credits. tax and reliefs. This is why it is important to know what you are entitled to. It is not the responsibility of your payroll office to ensure that you are reimbursed for things like tuition, pensions, caregiver tax credits, or medical expenses. 400 million euros are not claimed every year by people who have every right to get something.
A benefit in kind is any non-monetary benefit of monetary value that you receive from your employer. It is treated as an equivalent of taxable income with income tax (PAYE), PRSI and USC payable. Examples include company cars, medical insurance premiums, and childcare facilities. Some benefits are not taxable, such as subsidized meals, work-related tuition fees, pension contributions and contributions to professional bodies. Tickets and bicycles provided under the Cycle to Work program are also tax exempt.
Almost nine in ten employees who received the TWSS payment for some period during the pandemic and whose income was supplemented by their employer, now have a substantial unpaid tax debt from 2020 of around € 1,000, according to TaxBack.com. Neither the wage subsidy nor the PUP are “free” money, so it is important to consult with Revenue to find out what remains unanswered. They will allow a payment spread over the next few months.
Like salary, bonuses are fully taxed. An employer can offer a benefit (for example a voucher) worth up to € 500 tax-free once per tax year, but it cannot be cash.
By far the most valuable financial benefit is a contributory pension plan. It’s hard to underestimate its value, but a 30-something earning € 40,000 per year hoping to retire at 68 on € 20,000 per year, including the state pension, would have to contribute 12.2% of his / her monthly pension. salary (407 € per month). An employer contribution of 6 pc of salary, which is typical, would reduce their personal contribution to around € 100 after tax deduction.
Frontline workers will receive a benefit of extra days off as a thank you for their hard work during Covid. It’s a great way for businesses to reward staff with no additional tax impact and hopefully many more will follow.
Employee Stock Purchase Plans (EAPPs) can be a popular way to retain good workers. These plans allow employees to purchase company stock through payroll deductions, often at a reduced price.
But according to Marian Ryan of Taxback.com, three in four employees who own such shares have not reported the tax they owe on them. 72% of respondents say they ‘have no idea’ what is involved.
“It’s important to understand that when an employer offers stocks to an employee, those stocks are treated as BIKs. When shares are exercised or transferred and a gain is realized, a capital gains tax of 33% on that income may be due, possibly together with income tax, USC and PRSI. “
The tax deducted is known as the Stock Option Tax (RTSO). It is the difference between the market value of the shares when they are purchased on behalf of the employee and the amount they pay for the shares.
“People shouldn’t be afraid of stocks and tax implications. There are so many different stock plans with different tax rules that it can be confusing, but a good rule of thumb is that whenever you receive or give away stocks you have to assume that it may be. ‘a taxable event and seek advice on what type of return should be filed,’ says Marian.
The employee must submit an RTSO 1 form within 30 days of the date of exercise of the stock option. An income tax payment, USC and PRSI must also accompany the submission, then before October 31 of the following year file a Form 11 tax return for the gains made.
Getting it wrong can mean you end up with an invoice rather than a bonus.
Return to work protocols
What about workers who do not want to return to the office at all?
Difficult, says labor lawyer Richard Grogan of Grogan Solicitors.
“Employers have the right to tell you to come back full time. The government is sending mixed messages on this, calling for “flexibility”. There is no roadmap or legislation for this.
Emergency workplace legislation ended on September 20. It changes things, says Grogan. “If companies allow flexible working, they have to set up a home workstation and are obligated to pay for it. There must be fire, health and safety assessment, GDPR check to protect data. Until now it has been largely ignored, but now violations and lawsuits are being brought against employers. In a state of emergency, you can ignore things; there are legal requirements now.
“Your back bedroom, now an office, should be treated like a room in the company building. It could be a planning issue with the apartments – a private residence is now a commercial space. If you are working remotely on 100 pc, this is not a problem. The problem is the hybrid model. Perhaps the easiest option for employers is to bring everyone back.
Grogan sees the possibility of “city premium” salaries, as in London. “It’s a legitimate argument for the company to say that you can work remotely and move to Kerry, but the office worker has to be in Dublin – there could be a pay rise for that. There are equal pay issues there, so think of it as ‘attendance allowance’. It is still taxable.