PAYE Modernisation : Implications for Employers


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.