Revenue published a notice for employers and pension providers on the operation of LPT deductions at source. In the notice employers and pension providers are advised that where an employee/pension recipient has chosen payment of LPT by deduction at source, Revenue will notify the employer/pension provider via the employer tax credit certificate (P2C) to deduct LPT from the net salary or occupational pension as appropriate. The notice also deals with the tax treatment of Maternity Benefit, Adoptive Benefit, and Health & Safety Benefit from 1 July 2013.

For individuals who are making LPT payments by deduction at source, LPT deductions must commence on receipt of the P2C but this will be no earlier than 1 July 2013. The deductions must be spread evenly over the pay periods occurring on or between 1 July and 31 December 2013 and accounted for and remitted to Revenue on Forms P30 and P35. Employers and pension providers are advised to ensure that their payroll software is up to date to accommodate LPT deductions from 1 July 2013.

In the notice it is advised that tax will not be deducted ‘at source’ by the Dept of Social Protection (DSP) on Maternity Benefit, Adoptive Benefit and Health & Safety Benefit which are taxable from 1 July 2013 (PRSI and USC will not apply). Individuals who pay their tax through the PAYE system will, where possible, have their annual tax credits and cut-off point reduced by the amount of these payments. Employers/pension providers will be advised of the adjusted tax credits and cut-off points on employer tax credit certificates (P2Cs).

The notice is published on here and sets out further information on the above two issues.