Payroll Changes

Income Tax Band Increase

From 1st January 2025, the Standard Rate income tax band will increase from €42,000 to €44,000, with proportionate increases for married couples and civil partners. The main tax credits i.e. the Personal tax credit, Employee tax credit, and Earned Income tax credit will each increase by €125 to €2,000 The following tax credits, which support families and those with caring responsibilities will also increase: 

• the Home Carer Tax Credit by €150 to €1,950
• the Single Person Child Carer Credit €150 to €1,900
• the Incapacitated Child Tax Credit by €300 to €3,800
• the Dependent Relative Tax Credit by €60 to €305 and
• the Blind Person’s Tax Credit will also increase by €300 to €1,950.

In line with the 1st January 2025 increase in the National Minimum Wage by €0.80 per hour to €13.50 per hour (see below for further details on the National Minimum Wage) to continue to ensure that these workers remain outside the higher rates of USC, the 4% rate of USC is reduced to 3% and the entry threshold to the new 3% USC rate is increased by €1,622 to €27,382. Therefore the new 3% USC rate will apply to income between €27,382 and €70,044.

Motor Vehicle Benet in Kind (BIK) changes

The €10,000 temporary reduction in the original market value (OMV) of vehicles (including vans) in category A – D was extended until 31 December 2025. Furthermore, the lower limit in the highest mileage band will continue to be 48,000km. Partial Relief in respect of electric vehicles will be extended to 2027. This relief applies by reducing the OMV of the car by: 

• €35,000 in respect of vehicles made available up to 31 December 2025
• €20,000 in respect of vehicles made available in 2026; and
• €10,000 in respect of vehicles made available in 2027.

In addition to the above partial reliefs, employees can also avail of the extended temporary €10,000 OMV reduction for 2025. From 1 January 2025, no Benet In Kind charge will apply where you incur expense providing an electric vehicle charging point at your employees’ or directors main private residence. To avail of this exemption: 

• you must retain ownership of the electric charging facility
• the employee or director must have the private use of your electric vehicle and
• the charging point must be installed at a private residence situated in the State. The residence must be the employee’s or director’s sole, or main, residence for the year of assessment.

The exemption does not apply where your employee or director has the private use of a hybrid electric vehicle.

Minimum Wage Increase

Since 1 January 2025, the national minimum wage is €13.50 per hour. Some people get subminimum rates, such as people aged under 20 as per the table below:

Small benet exemption

From 1 January 2025, you can give employees up to ve small benets, tax-free, each year. These benets must not be in cash and the combined value of the ve benets cannot exceed €1,500. If more than ve benets are given in a year, only the rst ve benets may qualify for the tax exemption. Unused allowance amounts cannot be carried over. 

Enhanced Reporting Requirements (ERR) Reporting

The Finance Act 2022 introduced Section 897C which requires employers to report details of certain expenses or benets made to employees and directors. Reporting the details of these expenses or benets commenced on 1 January 2024. During 2024, Revenue was lenient with errors and corrections on the ERR reporting but they havemade us aware that there will be more focus applied to the ERR reporting going forward. Therefore we need to ensure that the relevant expenses are notied on time to avoid penalties and interest charges that may apply going forward. This ERR submission must be made on, or before the payment date to the employee. The relevant expenses that need to be reported through the ERR regime are: Small benet exemption The Small Benet Exemption applies to non-cash benets, such as vouchers, provided by employers. The exemption applies within certain annual limits and conditions. You must submit details of the date paid and value of this benet. Remote working daily allowance When you are paying a Remote Working daily allowance, you must report the total number of days, amount paid and date paid. Travel and subsistence You must submit the following Travel and subsistence items, including the date paid and amount of each payment, for: 

• €35,000 in respect of vehicles made available up to 31 December 2025
• travel vouched
• travel unvouched
• subsistence vouched
• site-based employees (including ‘Country money’)
• travel
• eating on site
• advance payments

Please ensure that details of these payments are submitted when submitting your payroll for processing.

Statutory Sick Leave

Since 1 January 2024, your staff have a right to 5 days’ sick pay a year (increased from 3 days in 2023). Sick pay is paid by you as the employer at 70% of your normal pay up to a maximum of €110 a day. Your employee must be working at least 13 weeks with your company before they can get statutory sick pay. You can have a more generous sick pay scheme, but you can’t give less than the statutory amount. The Statutory Sick Pay (SSP) is the legal minimum sick pay The entitlement to paid sick leave is expected to be phased in as follows:

• 2024 – 5 days covered
• the Single Person Child Carer Credit €150 to €1,900
• 2025 – 7 days covered
• 2026 – 10 days covered

Pension Auto-Enrollment

Auto-enrolment is a new pension savings scheme for certain employees who are not paying into a pension. They will be automatically included in the scheme but can opt out after 6 months The introduction of the Auto-Enrolment Retirement Savings Scheme, called My Future Fund, will start from 30 September 2025 Under the scheme, the employee, employer, and Government all pay a certain amount into the employee’s pension fund. A new public body, the National Automatic Enrolment Retirement Savings Authority, will be set up to administer the Auto-enrolment scheme. The scheme will be supervised by the Pensions Authority. You will be automatically enrolled in the new pension scheme if you are an employee and: 

• You are aged between 23 and 60
• You are not currently part of a pension plan
• You earn €20,000 or more per year

If you previously contributed to a pension but now do not, and you meet the other conditions,you will be automatically enrolled. If you earn less than €20,000 per year, or you are not aged between 23 and 60, you can choose to join the pension scheme if you are not already part of a pension plan If you as an employer does not meet their auto-enrolment obligations, you will be subject to penalties and possibly to prosecution. If you don’t make contributions on your staff’s behalf, you may be ned and have to make repayments with interest. You will not be enrolled in the new auto-enrolment scheme if you are paying into a workplace pension plan. The amount your staff will pay will be a set rate of your annual salary. You as the employer will match their contributions, and the Government will contribute an additional amount. You cannot pay more or less than the set rate. The amount your staff will pay will be a set rate of your annual salary. You as the employer will match their contributions, and the Government will contribute an additional amount. You cannot pay more or less than the set rate. The table below sets out the rates you, your staff, and the Government will pay: 

Both an employer’s and the Government’s contributions are capped at €80,000 gross annual salary.

We will forward more on this nearer the enrollment date deadline.