One year on from the introduction of Revenues new PAYE regime, employers need to ensure they are ready for the transition from 2019 to 2020.

Information recently released by Revenue shows that employers have made more than 6 million payroll submissions since the introduction of PAYE modernisation in January 2019. While most employers are getting to grips with the new system, the transition from 2019 to 2020 requires careful handling.

2020 Revenue Payroll Notifications

Employers who have not already done so should request RPNs for all employees before the first payroll run of 2020. If there is no RPN available for an employee, emergency tax must be applied.

Payments made in 2020

Payments paid on or after 1 January 2020 must be reported to Revenue when the payment is made, regardless of when the money was earned. Employers should use the tax credits and rate bands included on the 2020 RPN even if the payment refers to work carried out in 2019.

Payment dates

Payments must be reported to Revenue on or before the payment date and will be included in the monthly statement that Revenue issues summarising your payroll submission requests. Payment dates for 2019 and 2020 cannot be included in the same payroll submission.

Employment Detail Summary

Employers no longer need to provide P60s for their employees. Instead, employees can now access details of their pay and statutory deductions via the ‘myAccount’ service on the Revenue website.

Employees who have left

If you are making a payment in 2020 to an employee who ceased employment in 2019, you will need to submit a new RPN request and make a payroll submission for the post-cessation payment.

‘Week 53’

As 2020 is a leap year, this may create ‘Week 53’ payroll issues for some employers if it results in an additional pay day for employees (including pensioners) who are paid on a weekly, fortnightly or 4-weekly basis. Employees who are paid on a monthly basis are not affected. If you need information or assistance about the potential impact of ’Week 53’ on Income Tax and USC deductions, please contact a member of our team.

Fines and penalties

As in all matters involving Revenue, timeliness and accurate record-keeping is vital when processing PAYE. Bear in mind that your payroll submissions and corrections feed into Revenue’s risk analysis system and that if you are selected for a compliance visit, your PAYE processes will be checked. There is a fixed penalty of €4,000 for each breach of the PAYE rules. Further information is available on the Revenue website. If you have concerns or need assistance, please get in touch.

PAYE Employee – What to do now?

Employees will not receive a P60 from employers for 2019 or subsequent years.

Instead, from 1 January 2020, you will access your Employment Detail Summary on ROS.ie through ‘myAccount’.  This summary will contain your pay and statutory deductions for the year as reported by your employer or pension provider.  To claim additional tax credits, reliefs or expenses, PAYE customers must complete an Income Tax Return.  The quickest and easiest way to complete the Return is through PAYE services in ‘myAccount’.

A PAYE modernisation project currently under way has implications for all employers. The changes, set out in Finance Act 2017, come into operation on 1 January 2019.  David O’Connor explains what you need to do to prepare for the new regime.

Revenue’s PAYE Modernisation project will introduce ‘real time’ payroll reporting from 1 January 2019. Under this new regime, employers must calculate employees’ pay and deductions and submit this information to Revenue as (or before) each payment is made. To prepare for the new system, employers will need to review their processes and ensure that correct PAYE procedures are being followed. Any changes that may be needed to comply with PAYE modernisation requirements should be implemented before the new regime commences.

What is changing?

Under the new system, a Revenue Payroll Notification (RPN) will replace the current Tax Deduction Card (P2C). From 1 January 2019, employers will have to request the most up to date RPN from Revenue before making payments to employees. Employers must notify Revenue of employee payments in real-time, submitting details of the amount being paid, the payment date, and the PAYE, USC, PRSI and LPT being deducted. Revenue will issue a month-end statement summarising the employer’s submissions made during the month. If no amendments are required, this Revenue statement will be deemed to be the employer’s monthly return. However, if the Revenue statement is incorrect, the employer will need to correct the payroll data and make another submission. Finally, on or before the due date of an income tax month, the employer must pay the Collector General the income tax due to be deducted in respect of that month.

Return and payment due dates

 While all employers will have to provide payroll information to Revenue on a monthly basis, some smaller employers using the ROS system may be able to make payments on a quarterly basis. Return and payment due dates are as follows:

 

Remitter Type Return Filing Frequency Return Due Date Payment Frequency Payment Due Date
Monthly Monthly 14 days after the end of the month Monthly 14 days after the end of the month (23 days for ROS users who file and pay online
Quarterly Monthly 14 days after the end of the month Quarterly 14 days after the end of each quarter (23 days for ROS users who file and pay online)

[Table source: https://www.revenue.ie/en/employing-people/paye-modernisation/changes-from-1-January-2019.aspx|

What to do now

In June of this year (2018), Revenue will ask employers to submit a list of current employees. The immediate priority, therefore, is to check that you have registered all your employees and received a tax deduction card (P2C) for each of them. Check also that you have Personal Public Service Numbers (PPSNs) and up-to-date addresses for all employees. If you rely on payroll software and/or an agent to manage payroll on your behalf, make sure that they are ready for the PAYE Modernisation regime. Weaknesses in your PAYE procedures are likely to be highlighted by real time reporting so now is the time to ensure you are operating the correct procedures.  For further information and advice, please contact a member of our team.