Employers to grant the €40,000 income levy exemption in payroll

At present, individuals aged 65 or over whose annual income does not exceed €20,000, are exempt from paying the income levy. However, a married couple,

• who is taxed under joint assessment or separate assessment, and
• one or both of whom are aged 65 or over in the year, and
• whose combined gross income from all sources (excluding Social Welfare payments) does not exceed €40,000, are exempt from the income levy.

From 1 January 2010, individuals, who qualify for the €40,000 exemption under the above criteria, can apply to have income paid to them throughout the year without deduction of income levy.

To qualify for this treatment, an individual must complete a declaration form (PDF, 347KB) and return it to their employer/pension provider. By means of this form Revenue authorise an employer/pension provider to pay the income without deduction of the income levy. The form can be downloaded from the Revenue website. A paper version of the form (see sample form in Sample Forms) is available from:
Revenue’s Forms & Leaflets Service
Telephone (24-Hour service) 1890 30 67 06
If calling from outside the Republic of Ireland please phone + 353 1 70 23 050
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

When an individual gives this completed form to their employer/pension provider, the employer/pension provider should stop deducting the income levy and refund any amount of income levy already deducted from 1 January 2010.

If the individual’s circumstances change and they no longer qualify to have their income/pension paid without deduction of income levy, they are obliged to notify their employer/pension provider. In such circumstances the employer/pension provider should then begin deducting the income levy from the next payment in the usual manner.

This is a time where you can acknowledge your loyal clients who have remained with you throughout the last year or employee's who have gone above and beyond the call of duty.

If you are not in a position to offer a reward to your employees this year, all is not lost. You can still offer your employee's the option to take a gift card as part their salary for up to €250 per person per year and avoid paying any PRSI or PAYE. That is a saving for you and your employee of over €255+. A great way to save money and for your employee's