Guidance on payments made without deduction of income tax updated

Revenue has updated the Tax and Duty Manual regarding payments made without deduction of income tax to reflect the change in tax bands introduced by Finance (No. 2) Act 2023, with updated examples where relevant. The updated guidance also clarifies that re-grossing will apply by reference to the applicable income tax rate only, i.e., Universal Social Charge (USC) and PRSI will not be included for the purposes of calculating the re-grossed amount.

Where an employer makes payments without the deduction of income tax which fall within the provisions of section 986A TCA 1997, the employer is liable to pay the amount of tax due in respect of the re-grossed amount of the payment.  Re-grossing applies where either there is total non-operation of PAYE in respect of emoluments to an employee or an employer disguises the payment of emoluments.