PAYE modernisation. Overview Overview. 2. Changes from 1 January SMART PAYE. 4. Getting ready for PAYE modernisation

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1 Page 1 of 6 PAYE modernisation 1. Overview 2. Changes from 1 January SMART PAYE 4. Getting ready for PAYE modernisation 5. Communications Overview The PAYE Modernisation Project will involve the most significant reform of the PAYE system since its introduction in Employers will need to calculate and report their employees pay and deductions as they are being paid. This will make it easier to deduct and pay at the right time the correct amounts of: Income Tax Pay-Related Social Insurance (PRSI) Universal Social Charge (USC) Local Property Tax (LPT). The new real time reporting regime will be operational for all employee payments being made from 1 January This will require employers, agents and payroll providers to review their current business processes and practices so that they meet the new requirements. PAYE modernisation will: improve the streamlining of current business processes reduce the administrative burden currently experienced by employers to meet their PAYE reporting obligations.

2 Page 2 of 6 Changes from 1 January 2019 A Revenue Payroll Notification (RPN) will replace the current Tax Deduction Card (P2C). From 1 January 2019, you will be required to: request the most up to date RPN before making payments to employees report employee payments in real-time reconcile Revenue s response to the payroll submission. At the end of each month, you will receive a statement from Revenue with payroll submission totals. You will need to either: accept the statement as your monthly return correct payroll data if the statement is incorrect. A variable direct debit option will also be available, subject to Revenue approval. What is a Revenue Payroll Notification (RPN)? The RPN will provide you with the necessary information to deduct from the employee the correct: tax USC LPT. You will be able to request an RPN using third party payroll software or through ROS. RPNs will be available to you before 1 January New employees You can request an RPN for a new employee, except where the employee: does not have a PPSN is not registered for PAYE. You will have to apply emergency tax in these cases. Employees must register their first employment in Ireland, using the online service Jobs and Pensions. You will then be able to request an RPN.

3 Page 3 of 6 How to report in real time If you use payroll software, there are two methods of reporting payroll in real time: Direct Payroll Reporting allows payroll software communicate seamlessly with ROS to exchange the required information. ROS Payroll Reporting allows you to use files created by payroll software and upload these through ROS. Payroll software companies have been working with Revenue to make sure software will be compatible with Revenue s requirements. If you do not use payroll software, you will be able to retrieve RPNs and complete a form through ROS. This reporting process will contribute to a significant streamlining of existing business processes by eliminating the need to file: P30 P35 P45 P46. You will also no longer have to produce a P60 for employees. What information will you report to Revenue? You must provide Revenue with payroll information for each employee, including: amount of pay payment date amount of Income Tax, USC and LPT deducted. Statements from Revenue Revenue will issue you with a monthly statement based on your submissions. The statement will show a breakdown of your liability for: Income Tax USC PRSI LPT.

4 Page 4 of 6 If the details on the statement are incorrect, you must correct the payroll data and make another submission. The statement will be deemed to be the return if no amendments or corrections are made before the return due date. Return and payment due dates Quarterly remitters will now have to file monthly returns, but the payment due date will remain the same. Return and payment due dates Remitter Type Return Filing Frequency Return Due Date Payment Frequency Payment Due Date 14 days after the end of the month 14 days after the end of the month (23 days for ROS users who file and pay online Quarterly 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) SMART PAYE The objective of PAYE modernisation is to deliver real time information. Revenue, employers and employees will have the most accurate, up to date information relating to pay and statutory payroll. This will ensure that right amounts of Income Tax, PRSI, USC and LPT are: deducted at the right time deducted from the right employees paid by employers in the correct amount of deductions for every employee. This will improve the accuracy, ease of understanding and transparency of the Pay As You Earn (PAYE) system for all stakeholders. SMART PAYE sets out the key design principles of the project.

5 Page 5 of 6 By working to these principles throughout the design stages, we can ensure that the project meets its objective while also ensuring the benefits for all stakeholders are easily identifiable. What are the benefits? For an employer: Seamless integration into payroll. Minimize employer cost to comply. Abolition of P30s, P45s, P60s and end of year returns. Right tax paid on current due dates. Time savings. For an employee: Simplified online services. Maximise use of entitlements. Automatic end of year review. Real time accurate data. Transparency. For Revenue: Statutory in-year return. Making compliance easier. Accurate up to date income details. Reduced customer contacts. Timely targeted interventions. Getting ready for PAYE modernisation In preparation for PAYE modernisation, employers should ensure that the correct PAYE processes and procedures are being followed. In particular, you should ensure that you have registered all your employees and have received a tax deduction card (P2C) for each of them. It is also important to check that you have the correct PPS number for each of your employees.

6 Page 6 of 6 For guidance, these steps should be followed: Register as an employer Ensure that you have the correct PPSN for all employees Register employees Obtain up to date P2C Complete the P45 process correctly Be aware of your obligations at year end. Communications An extensive stakeholder engagement plan for PAYE modernisation has been put in place. Workshops and briefing sessions have been delivered to stakeholders including employers, companies and representative bodies. A co-design approach has been adopted with the Payroll Software Developers Association (PSDA) and other relevant stakeholders. See the summary findings from these workshops and briefing sessions. The Schema Documentation was published on 30 June 2017 following regular focussed workshops with PSDA.