Revenue have today abandoned Brian Lenihan’s plans to tax employees on professional subscriptions and membership fees.
In an eBrief unveiled this evening, Revenue confirm that most professional subscriptions will continue to be exempt from tax under Benefit in Kind rules.
This reverses the former Finance Minister’s announcement in last December’s Budget, that the existing Benefit in Kind exemption on these fees would be scrapped from January 2011. This would have meant that where an employer paid a professional membership or subscription fee on behalf of an employee, the employee would have faced a tax, PRSI and USC charge on the amount paid.
Today, Revenue confirm that the exemption will still apply
- Where the employee is required by law to be a member of a professional body, in order to carry out their work. This includes architects who (under the Building Control Act 2007) must be registered with the Royal Institute of the Architects of Ireland; and Health care professionals who are obliged by the Health and Social Care professionals Act 2005, to be registered with the Health and Social Care Professionals Council.
- Where the employer requires the employee to hold a practising certificate or licence, eg accountants working in professional practices.
- In certain other situations, where the employee is a member of a professional body which is relevant to their occupation. This will cover accountants, engineers and others working in professional capacities in industry.
Revenue stress that the BIK exemption applies only where the professional subscription is relevant to the employee’s work. They cite practical examples to show that the exemption will not apply to a qualified architect who works as a HR manager, or a trained solicitor working as a media presenter.
The Revenue eBrief on this subject outlines 11 practical examples which illustrate how these rules will work in practice. Revenue also stress that Benefit in Kind PAYE, PRSI and USC must be charged on all cases not covered by the exemption.
I think this is a very positive move on Revenue’s part. The original plans to scrap this BIK relief were badly thought out, and a very poor appreciation of the much-vaunted ‘knowledge economy’. It is nice to see Revenue taking action to restore this relief in most cases.
That said, I wonder would such a u-turn have been politically possible if Mr. Lenihan was still Minister for Finance. Maybe it is time for his successor Michael Noonan to work alongside Revenue in reversing some of the anti-business and anti-employment measures introduced in recent Budgets – several of which have proved in the meantime to be counter -productive.