Gallagher Keane - January Insights

The modifications detailed below will be effective for accounting periods commencing on or after 1 January 2024.

R&D Corporation Tax Credit (RDTC) Rate Increase:

Similar to the adjustments made to the R&D Tax Credit, the RDTC rate experiences an increase from 25% to 30%.

R&D Corporation Tax Credit Minimum Repayment Limit:

Claimants of the R&D Corporation Tax Credit will retain the option to:

• Offset the credit against tax liabilities.
• Choose to have the credit repaid through refundable instalments.

The refundable instalments will now follow this structure:

1. First Instalment: The greater of €50,000 (previously €25,000) or 50% of the credit claimed.
2. Second Instalment: Continuing to be based on three-fifths (30%) of any remaining balance of the R&D corporation tax credit.

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CGT Deadline Reminder 31st January 2024

As we step into the new year, it’s crucial to be mindful of pending financial responsibilities, especially when it comes to Capital Gains Tax (CGT). The dates for both payment and filing are intricately linked to when you sell, gift, or transfer an asset.

Your payment for CGT is due before you file your return. For instance, if you disposed of an asset between 1 January and 30 November, payment is due by 15 December. The return, in this case, will be due by 31 October of the next year.

Now, let’s focus on the deadlines:

1. Initial Period (1 January to 30 November):Payment Deadline: 15 December of the same year.Return filing is due by: 31 October of the next year.
2. Later Period (1 December to 31 December):The crucial date to highlight: Payment Deadline – 31 January of the next year.Return filing is due by 31 October of the following year.

Be aware that a late payment incurs an interest charge, and missing the deadlines altogether incurs penalties.

Share Option Changes in 2024: Essential Information for Employers

From 1 January 2024, employers will be required to withhold Irish payroll taxes from gains arising on the exercise of share options. This will be a significant change, as up to now, the onus was on employees (and directors) to pay the “Relevant Tax on Share Options” (RTSO) through self-assessment to the Irish Revenue within 30 days of the date of exercise. The employees also had to submit Form RTSO1 to the Irish Revenue within the same timeframe.

What Employers Should Consider:

1. Enhanced Reporting Requirement (ERR): With the new ERR effective from January 1, 2024, employers face an additional reporting burden. Understanding and complying with this requirement will be essential to avoid penalties.
2. Careful Management of Payroll Tax Withholding: Employers will need to carefully administer payroll tax withholding. Considerations such as ‘sell to cover’ arrangements should be planned, and effective communication with employees regarding share option exercises will be crucial.
3. Funding Tax Liabilities: Employers should strategize how tax liabilities will be funded, considering potential delays between the exercise of options and the issuance of shares.
4. International Considerations: If employees who worked in Ireland between the grant and vesting of share options have since left the country, Irish tax liabilities may still apply on option exercise. Employers must navigate payroll tax withholding in such cases.
5. Form Submission Requirements: Employers are reminded to submit Form RSS1 for 2023 to Revenue by March 31, 2024, detailing share options granted, exercised, transferred, assigned, or released during 2023.

In preparation for these changes, employers are encouraged to seek professional advice and proactively address these considerations to ensure compliance and effective management of share option-related tax obligations.

2024 New Payroll Reporting Obligations for Employers

Revenue has released enhanced reporting requirements for employers, set to take effect on January 1, 2024. Employers will now be required to electronically notify Revenue in real-time regarding various tax-free payments and benefits provided to an employee/director.

What Needs to be Reported:

• Daily Allowance for Remote Work: Employers should report payments up to €3.20 per day provided to employees working remotely.
• Travel and Subsistence Expenses: Any reimbursed travel and subsistence expenses, whether vouched or unvouched (like civil service mileage rates), as well as country-specific allowances and emergency travel costs.
• Small Benefits Exemption: Benefits or vouchers given to employees, limited to two small benefits each year, with a total value not exceeding €1,000.

Information Required for Reporting:

• Employee details
• Amount paid
• For remote work, the number of days considered

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Benefits of Outsourcing your Business’s Financial Function

Outsourcing your accounting needs is one of the most useful strategies SME owners can use to maximise their growth potential. This method allows for greater control over cash flow, improved accuracy and compliance regarding financials, and a range of other advantages that can help your business succeed.

We have outlined below some of the important benefits that can be achieved by outsourcing the payroll and financial functions of your organisation. Here are some benefits of outsourcing your financial function:?

Time Savings:

Managing accounting functions can be time-consuming for small business owners. Outsourcing these tasks allows owners to focus on other areas of their business that require their attention.

Flexibility:

Outsourcing accounting functions allows small businesses to tailor their accounting services to their specific needs. This can help ensure that the company is only paying for the services that it actually needs.

Improved Financial Reporting:?

Professional accountants can provide small businesses with regular financial reports that are accurate, timely, and easy to understand. This can help business owners make better-informed decisions about their company’s finances.?

Improved Cash Flow Management:

Cash flow management is critical for business sustainability. Outsourcing financial functions provides access to expert analysis and forecasting, allowing proactive measures to prevent cash flow pitfalls that can threaten your business’s stability.?

Cost Savings:

Having an internal finance team to hand can be a considerable investment. You will more likely need an accountant who is qualified or at least part-qualified to support your business. You will also need to cover sickness and holiday. With outsourcing, you can have access to a fully qualified accountant who is engaged to carry out the tasks required. These can be done on a real-time basis and delivered to you at a fixed fee. Equally, when you’re looking to grow your company, you won’t need to go through the hiring process, as the outsourced services can easily be increased to your requirements.

Keeping up to Date with Tech:

Technology is moving at an alarming rate. There are apps for pretty much everything these days which makes streamlining your finance function a lot easier. By outsourcing to cloud accounting experts, you will not have to worry about keeping up to date with the latest apps available and training your internal team on any new software or updates. A good outsourcing partner will open up opportunities to make your finance function more efficient and provide solutions to any finance problems you experience.?

Expertise:

With an internal finance team there will be limitations to knowledge, especially if there is only one person involved. With outsourcing you will have a team of specialists available to provide the knowledge and support that goes way beyond day-to-day bookkeeping. Should you have complex tax questions or need to model your cash flow, a good outsourcing partner will be able to support you.?

Preparation for Growth:

Planning business expansion requires robust financial systems. Outsourcing equips you with advice and structures tailored for growth, ensuring your financial processes are poised to support and sustain your ambitious plans

By engaging the services of a professional outsourcing team, not only is the business owner ensuring that their organisation benefits from the broad experience of that team, but it also allows them to focus their energy and full attention on growing and developing the business itself.

At Gallagher Keane Chartered Accountants , our dedicated team of professionals is committed to providing business owners with valuable support. We take care of various administrative tasks, forecasting, and accounting management on behalf of your organisation. Reach out to us for a free consultation: