Ireland: Parking Levy imposed
Ireland: Parking Levy imposed
The Government has announced that the long delayed 200 annual car parking levy will finally be phased into operation in the current tax year ending 31 December 2010, almost two years after it was first announced in the Budget of October 2008. Initially it will be introduced on a pilot basis in Dublin 1, 2, 4 and parts of Dublin 7 and 8 only, with effect from 1 October 2010.
The levy is a charge on employees who use a car parking facility, in certain designated areas, which is provided either directly or indirectly by their employer. There have been long delays in designating the specific areas in which the levy will apply. The Minister for Finance has indicated that the designated areas subject to this levy will be extended to most of the Dublin City Council area as well as urban areas of Cork, Galway, Limerick and Waterford in 2011.
Affected employees will only be subject to the levy on a pro rata basis in the year of introduction. For example, in 2010 under the pilot scheme, all affected employees would be subject to the car parking levy in the amount of 50 (i.e. 200 x 3/12 October to December 2010).
Administration
The employer is responsible for deducting the levy from the employees net salary (after income tax, PRSI, health levy and income levy) via the payroll system and remitting it to the Revenue. Deductions will be spread throughout the year on a pro rata basis in line with the frequency of salary payments for each relevant employee. Employers will be obliged to keep records of the locations at which parking facilities are provided, and employees who have, and cease to have, any entitlement to a parking space. The levy is not a tax deductible allowance. A penalty of 3,000 applies where an employer fails to deduct the levy from employees or remit the levy to the Revenue.
Exemptions from the Levy
Disabled drivers, employees of the emergency services, retired individuals and individuals with occasional permission to use a parking space are exempt from the parking levy. Motor bikes are excluded from the levy. Vans are also excluded from the levy where the employee is required to use the van in the performance of their duties. However, an employee who uses a company car or their own car in the performance of their duties will be liable to the levy.
Reliefs from the Levy
1. Shared parking arrangements A reduced levy of 100 per annum applies for each employee where car parking spaces are shared between employees. This is on the basis that the ratio of employees to each car parking space is 2:1 or more.
2. Job Sharing and Part-time work Where an employees normal pattern of work is on the basis of part-time or job-sharing arrangements, then the levy amount payableis reduced pro-rata but not below a minimum of 50% of the amount payable.
3. Entitlement to use for only part of a year The amount of the levy payable by the employee is reduced on a pro-rata basis.
4. Maternity leave The 26 week period of maternity leave to which the individual is entitled is disregarded for the purposes of the levy. Additionally, the 10 week period immediately prior to the commencement of maternity leave is also disregarded.
5. Shift Work The levy will be disregarded in respect of the period an employee works shifts where work starts after 9pm or before 7am.
Time to Plan
In light of the forthcoming introduction of the parking levy, it is crucial that all affected employers consider the practical implications of operating the parking levy, as failing to operate it correctly can result in substantial penalties.
It is crucial that affected employers ensure that all the necessary systems are put in place to collect the levy and employees impacted by the change are identified and accounted for. It is also suggested that employers advise their employees about the levy in advance of its introduction.
Given that employees can disclaim their entitlement to the use of a parking space, consideration might be given to the recently introduced Cycle to Work scheme. Under this scheme employees can be provided with a tax free benefit in the form of a bicycle and cycling equipment with a value up to a maximum of 1,000 every 5 years, provided certain conditions are met, attracting possible cost savings for both the employer and the employee.
Source: Ernst and Young
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