Credit in respect of tax deducted from emoluments of certain directors and employees

Revenue eBrief No. 006/22

Credit in respect of tax deducted from emoluments of certain directors and employees

Tax and Duty Manual Part 42-04-59 – Credit in respect of tax deducted from emoluments of certain directors and employees – has been amended in section 6 to reflect the update to the debt warehousing scheme introduced in Finance Act 2021. It extends the scheme to allow self-assessed income tax payers with employment income, who have a material interest in their employer company in certain circumstances, to warehouse income tax liabilities relating to their Schedule E income.

Extract:

6. Section 997A and Debt Warehousing
If an employer is availing of debt warehousing for PAYE (Employer) liabilities, a director or employee with a material interest in the company cannot normally claim credit for PAYE deducted if it has been warehoused and not paid. However, if the director or employee is eligible for income tax warehousing (because they are also subject to self-assessment), she or he can warehouse all liabilities including any Schedule E liabilities.

Following the enactment of Finance Act 2021, a self-assessed director or employee in these circumstances (i.e. with a material interest who is not entitled to claim credit for PAYE deducted because it has been warehoused by her/his employer) who is not currently eligible for income tax warehousing because s/he has not suffered at least a 25% reduction in total income, may nevertheless avail of income tax warehousing but only in respect of her/his Schedule E liabilities.