An Introduction to PAYE Modernisation

Transcription

1 An Introduction to PAYE Modernisation

2 TABLE OF CONTENTS 1. INTRODUCTION PAYE Modernisation Implementation Date Penalties What will PAYE Modernisation mean to the Standard Employer? Prepare prior to 01 st January CollSoft Payroll DATA ALIGNMENT IN List of Employees Submission Replacement of W PPSNs Cleansing of Data DEASP Income REVENUE PAYROLL NOTIFICATIONS TO EMPLOYERS P2Cs / Employer Tax Credit Certificates Revenue Payroll Notification (RPN) IN-YEAR EMPLOYEE FORMS (P46, P45P1, P45P3) Commencing Employees Ceasing Employees THE PAYROLL SUBMISSION What is the Payroll Submission Contents of the Payroll Submission Payroll Submission Due Date (On or Before the Payment Date) Submitting the Payroll Submission Incorrect Payroll Submissions Varying Payroll Frequencies Payments at irregular intervals Payments made other than on the employee s regular pay day PERIODICAL PAYMENTS TO COLLECTOR GENERAL P Employer Statements Employer Statement Reconciliations Payment of tax by direct debit PAYE MODERNISATION AND EMPLOYEES Statements to Employees Employee Declaration of Cessation of Employment In-Year Reconciliation... 17

3 8. MISCELLANEOUS DEASP Income Employment ID Dual Employments Emergency Tax P APPENDIX A LIST OF EMPLOYEES APPENDIX B RPN APPENDIX C PAYROLL SUBMISSION ITEMS... 23

4 1. INTRODUCTION This guide is prepared with the sole purpose of offering a high-level overview (pocket guide) to the implementation of PAYE Modernisation. This is not intended as an operational or comprehensive guide to PAYE Modernisation. The Revenue Regulatory framework is not yet published, therefore information in this guide is subject to change. 1.1 PAYE Modernisation On 11 th October 2016, the Minister for Finance announced the introduction of the PAYE Reform project. The Finance Act 2017 legislated for the reform of the PAYE reporting process, introducing new reporting requirements for all registered employers in Ireland with effect from 01 st January Revenue will continue to develop and implement the associated Regulations throughout The objective of PAYE Modernisation is that Revenue, employers and employees will have the most accurate, up to date information relating to pay and statutory payroll deductions. This will ensure that the correct statutory deductions (PAYE, USC, PRSI, LPT) are made at the right time from all employees. 1.2 Implementation Date PAYE Modernisation is effective from 01 st January This means that not only must the payroll software conform to the new reporting standards from 01 st January 2019, but employer s must have cleansed their payroll data throughout 2018 in order to fulfill the mandatory data reporting requirements. 1.3 Penalties Where an employer fails to comply in the submission of a return, statement, notification or certificate, to remit income tax to the Collector-General, to make a deduction or repayment in accordance with regulations made under section 986, of the Finance Act 2017, or to keep and maintain a register of employees in accordance with section 988A, of the Finance Act 2017, that person shall be liable to a penalty of 4,000.

5 1.4 What will PAYE Modernisation mean to the Standard Employer? The effect of PAYE reform it not restricted to the actual reporting of payroll information but imposes obligations on employers to be efficient, transparent and accurate in the payroll information they collect, process and report. In addition to reporting change, there is a change of PAYE reporting terminology employers must become familiar with. This terminology relates to the replacement of current processes and the introduction of new submission requirements. Currently some payroll calculations and amendments are not processed on a real time basis but as part of a periodical in-year or end of year adjustment. PAYE Modernisation effectively removes this option as employer s report and declare the payroll in line with payment dates. Each submission is a signed declaration of it s true and accurate reflection of the payroll. While there will be options to delete a submission and submit a replacement submission, such activity will feed into Revenue s risk analysis systems. With the submission of returns on a real time basis the compliance of employers in terms of timely submissions, complete submission, volume of deletions and replacement submissions, will be monitored and will trigger Aspect queries and Audits where non-compliance or risk is identified. 1.5 Prepare prior to 01 st January 2019 Employers must prepare for 01 st January 2019 launch. Key areas that may require employers attention and planning include: Alignment and cleansing of current payroll data to meet 2019 reporting requirements. Adaptation of current payroll processes and implementation of new processes to collect necessary additional employee data. Education ensure your payroll team are aware of the regulatory changes and the new requirements to be fulfilled. Understand and apply the new deadlines for reporting. Review software capabilities and functionality to meet PAYE Modernisation requirements.

6 1.6 CollSoft Payroll 2019 CollSoft Payroll 2019 will be PAYE Modernisation compliant. PAYE Modernisation presents significant challenges for employers and we, at CollSoft, are very conscious of the disruptive nature of this reform to our customers. The development of CollSoft Payroll 2019 will minimize any changes to the familiar software functionality to support a smooth transition for employers and the payroll department. The same user interface will be maintained in order to retain the familiarity of use, minimizing the requirement for learning and adaptation of the software user. Additional functionality will be incorporated to facilitate the reporting requirements under the reformed PAYE scheme. Additional employee data fields will be added to meet additional reporting requirements, some of these data fields will update automatically, for example the RPN number and Employment ID, whereas some will require user intervention, for example Director status. There is significant change to the timing and format of submissions, along the way the software will intelligently detect, where possible, and flag that submissions are pending. The CollSoft Helpdesk will be on hand to support you through the transition and implementation of the new processes.

7 2. DATA ALIGNMENT IN 2018 In preparation for PAYE Modernisation, Revenue are driving an awareness campaign for the duration of 2018 to educate employers on the introduction of reporting reform and the impact on payroll processes. As part of the preparation process a data alignment project will become effective from June The purpose of data alignment is to align the employments, as per each employer s payroll records, and those which Revenue hold for you and the employee. This alignment will be processed via an employer s submission of a List of Employees file which will list the employees in their employment, as at the time of submission. 2.1 List of Employees Submission While the majority of the required data already exists within CollSoft Payroll 2018 they are three notable points of data which you must review and ensure are accurate prior to making this List of Employees submission. List of Employees Data Item PPSN Proprietary Directors Employment ID Detail The inclusion of the PPSN is a mandatory field, therefore any employees for whom you do not hold a PPSN on file, you must rectify this and update the employees record accordingly. For the purpose of this submission, a Proprietary Director is defined by Revenue as the company s beneficial owner or director who can control directly or indirectly more than 15% of the company s ordinary share capital. These employees will be denoted as a Class S PRSI contributor within CollSoft Payroll, it is imperative to identify any other Directors who do not hold this control but may be incorrectly categorized as a Class S PRSI contributor. The Employment ID is a new identifier which will be effective from 01st January For the purpose of this submission, the introduction of this data item is brought forward in order to identify dual employments. Dual employments occur where an employee has separate employments with the one employer, this can be determined by separate concurrent employment contracts or pay arrangements based on the organization of work within the organization. This is most notably recorded as an employee set up multiple times within the one payroll solution or across varying departmental payrolls within the organization. Each employment must be assigned its own unique Employment ID so that Revenue can register the multiple employments accurately and allocate the available tax credits and SRCOP across these employments.

8 The notification process to complete this submission is yet to be determined by Revenue, presently ROS is scheduled to start accepting the List of Employees submission from June Important Note: The submission of the List of Employees is a one-time submission only. Employer s will not be able to make an Amended or Supplementary submission. If the payroll for a single employer PAYE number is segregated over varying sites, PCs, or for management purposes the submission must be created for each section and all files uploaded to the submission service, at the same time, for a single point of submission. Revenue will automatically cease the employment of any employee which is not included in this submission, including Directors. 2.2 Replacement of W PPSNs Before 2000, when some women married they were assigned the same PPS number as their husband, but with a W at the end of the number. This W number was issued by Revenue to identify spouses in a jointly assessed relationship. The W number was linked to the PPS number of the assessable spouse (which is the term used in Revenue for the spouse who is charged tax on the income of both spouses). In preparation for 2019, the Department of Employment Affairs and Social Protection are in the process of issuing replacement PPSNs to those who have this W format PPSN. DEASP are automatically informing Revenue when a replacement PPSN is issued. In turn Revenue will issue a new P2C to employers advising them of the original PPSN and the replacement PPSN for the employee. For the duration of 2018, both PPSNs will continue to be included in each 2018 P2C issued. On import of such a P2C, CollSoft Payroll 2018, will identify the presence of an old PPSN and the replacement PPSN. The employee s record will be amended accordingly, the change will be recorded in the notes section of the employee s payroll record accordingly. 2.3 Cleansing of Data It is advisable that apart from the 2018 Revenue reporting and communications, that employers review and cleanse their payroll data. This entails collecting any missing data from their employee payroll records and completing (or at least collecting in advance of 2019) additional reporting information which will be required, such as; Complete name of each employee Where a PPSN is not known; full name, address and date of birth. These employees must be assigned a works numbers (employers are obliged to make all attempts to ascertain the employees PPSN and to verify it accordingly). Identify dual employments. Cease employees who remain on the payroll after employment has ceased/contracts have been terminated by filing a P45 with ROS. Update Pension Tracing Numbers where the employer provides access to an occupational pension scheme. Ascertain the status of each Director; Proprietary Director or Non-Proprietary Director.

9 2.4 DEASP Income As part of the PAYE Modernisation project and, as a consequence of the introduction of GDPR, on 25 th May 2018, the reporting of DEASP income, most commonly Illness Benefit, changed with effect from 01 st January Employers are no longer required to report Illness Benefit claimed and received by employees from DEASP. DEASP will report such claims to Revenue who in turn will adjust the employees Tax Credit Certificate to capture any necessary PAYE due on the claim (DEASP benefit payments are not subject to USC or PRSI). Therefore, where employers are in receipt of Illness Benefit on the employee s behalf, they must ensure that this portion of pay is not subjected to a PAYE deduction in the payroll as Revenue are collecting the PAYE through a Tax Credit and SRCOP adjustment. From 2019, it will be necessary for the employer to continue to poll for an RPN for amendments to the Tax Credits and SRCOP prior to processing each periodical payroll for affected employees.

10 3. REVENUE PAYROLL NOTIFICATIONS TO EMPLOYERS 3.1 P2Cs / Employer Tax Credit Certificates The issue of the P2C (electronic Tax Credit Certificates) will be discontinued with effect from 01 st January 2019 and will be replaced with the Revenue Payroll Notification (RPN). 3.2 Revenue Payroll Notification (RPN) The Revenue Payroll Notification (RPN) will contain all the data items of the P2C file with the following additional data items; RPN Data Item RPN Number Employment ID PRSI Exemption Indicator PAYE Exclusion Order Indicator PRSI Class and Subclass Detail Unique to each employee within the RPN, this number will be included in the subsequent Payroll Submission Request. This informs Revenue of the RPN instruction applied. Unique identifier as previously advised by the employer to Revenue which identifies the employment, differentiating between dual employments with the one employer. This will appear only where DEASP carries out a review and determines that the individual should be exempt from paying PRSI in Ireland. Indicates if there is an exclusion order on file for the employee for the specified period. This will appear only where DEASP requires the employer to amend the employee PRSI Class and Subclass, i.e. DEASP has carried out a review. From 2019, due to the inclusion of the RPN number in the Payroll Submission Request, it is important that employers continue to follow the regulations to apply the most recent issued instruction from Revenue at all times. Revenue will not automatically issue Tax Credit Certificates to employer s, the only process, from 2019, is for employers to submit an RPN request, for a specific employee listing, and Revenue will respond with an RPN request containing the most recent allocated tax credits etc. There will be two RPN processes: Lookup RPN New RPN request

11 3.2.1 Lookup RPN A lookup RPN request will submit a list of user specified employees for whom the employer is querying the availability of a replacement RPN. Employers may do this for all employees prior to processing each payroll period, or for specified employees for whom they expect a replacement RPN, for example employees in receipt of Illness Benefit New RPN Request From 2019, it is expected that the employer will make an RPN request prior to processing each payroll period. Any newly issued and/or amended RPNs must be applied prior to processing the payroll period. Each employee RPN response will have its own RPN number which, once uploaded to the payroll will be included in the subsequent Payroll Submission to Revenue. Revenue will apply checks to ensure the latest instructions are applied by the employer.

12 4. IN-YEAR EMPLOYEE FORMS (P46, P45P1, P45P3) In-Year P forms; P46, P45P1, P45P3 and the P30, will be discontinued under the new scheme. However, they are replaced with new processes of reporting which are detailed further below. 4.1 Commencing Employees Under current regulations, when a new employee commences employment (or resumes employment with you after a previous cessation), the employer must complete either of the following submissions to commence the employment: Where the employee supplies a Form P45: complete and submit P45 Part 3 Where the employee has not supplied a Form P45, and is unable to do so: complete and submit a P46 The submission of the P45P3 or the P46 commences the employment with Revenue for the new employer. Revenue will issue a new P2C (electronic tax credit certificate) to the employer following receipt of either form. With effect, from the 01 st January 2019, the Form P45P3 and P46 will be discontinued. To commence a new employment the employer will be required to make an RPN request for the new employee/new employment. This RPN request will commence the new employment, additionally Revenue will make an RPN response advising of the tax credits, SRCOP etc. to be applied to all payroll calculations until such time as a replacement RPN is requested to update the employee record. The advantage of this will minimize the instances of Emergency Tax. Payroll Submission Data Item Employment Start Date Detail Report this date, in the initial Payroll Submission, for the employee. Establishes the start date for the employment. Revenue will use this in conjunction with other employment details held by Revenue to determine if credits and rate bands need to be reallocated to this new employment. 4.2 Ceasing Employees Under current regulations, when an employee leaves the employment, is granted a career break or dies while in the employment, the employer is required to complete form P45 (cessation certificate) immediately on cessation. Form P45 Part 1 is submitted to Revenue immediately on cessation (ROS submission can only be made on the date of cessation or after).

13 Form P45 Parts, 2, 3, 4 are given to the employee on the date of cessation. With effect, from the 01 st January 2019, the Form P45 will be discontinued. The cessation of an employment will be reported to Revenue by the inclusion of the cessation date in the final Payroll Submission which includes the final payment made to an employee. If there is no final payment to be made to an employee then the cessation instruction will still be submitted via the Payroll Submission, the employee will be included with their cessation date but with a nil pay record for the period. Thereafter, the employee will only be included in the Payroll Submission if a subsequent payment is made to them, or an adjustment is required to the date of submission. The employer will not be required to issue any form of Revenue cessation certificate to the employee. Payroll Submission Data Item Date of Leaving Detail Report this date, in the Payroll Submission, when an employee is leaving (date contract terminates) or if employer ceases trading. This will trigger the reallocation of tax credits to other registered employments. Employees will be able to cease their own employments through myaccount. This does not relieve employers of their duties and obligations to operate cessations correctly or the notification to Revenue of a cessation. This employee facility allows the employee control, to remove the allocation of tax credits from employers with whom they have ceased employment, where the employer is not fulfilling their duties to notify Revenue of the cessation or there is a delay in doing so Post Cessation Payments Once an employee ceases employment their tax credits may change for a number of reasons; Reallocation to a new employment Reallocation to a spouse Revenue reduction of tax credits due to a taxable Benefit claim from DEASP Where an employee ceases employment, and the cessation has been reported on the Payroll Submission, but a post-cessation payment is due to the employee, employers must submit an RPN Lookup request prior to processing this subsequent payment. The RPN held on file, at time of cessation, is invalid and will lead to an under-deduction of PAYE and USC.

14 5. THE PAYROLL SUBMISSION The Payroll Submission is a new filing obligation introduced with PAYE Modernisation. 5.1 What is the Payroll Submission? The Payroll Submission will be a comprehensive detailed account of the payroll processed for the relevant pay date. It contain similar data items as the current P35 with significant additional reporting fields giving Revenue a comprehensive view of the employer s payroll and hence each individual employee s statement of earnings and deductions. A notable difference is the P35 reports the annual cumulative totals, whereas the Payroll Submission will report the periodical values. From these periodical values Revenue will accumulate the totals from each periodical submission. This submission will give Revenue a complete view of the employer s payroll in line with each pay date, thus making the P35 obsolete for the tax year 2019 onwards and removes the requirement for any end of year submission. 5.2 Contents of the Payroll Submission The Payment Submission mandates the inclusion of certain data items which are either mandatory for all employees, or are conditional based on the inclusion of other data items. If an employer has not updated or collected adequate data for the employee, he will not be able to complete the Payroll Submission for this particular employee. Each Payroll Submission will report this period only payroll items for the related payroll period. This means that the submission will only report the payroll items for the current period in question and are not the accumulated year to date totals. From this Revenue will be able to publish a periodical statement, in line with the payroll payment and submission frequency, to each included employee of the periodical gross pay and statutory deductions. A complete list of the data items contained within the Payroll Submission can be found in Appendix C. 5.3 Payroll Submission Due Date (On or Before the Payment Date) The Finance Act 2017 legislates for the implementation of PAYE Modernisation defining that Returns by Employers are to be made on or before the making of any payment of any emoluments in respect of an employee. Revenue further clarify that the on or before date of the submission is driven by when funds are actually made available to the employee. Paid by Cash Paid by Cheque Paid by Credit Transfer Submission is due, at the latest, on the day the cash is given to the employee. Submission is due, at the latest, on the day the cash is given to the employee. Submission is due, at the latest, on the day the funds are available in the employee s bank account.

15 5.4 Submitting the Payroll Submission Each Payroll Submission will have a unique Payroll Run Reference which will facilitate the submission of varying files for the same payroll date. This will apply to submissions for varying payroll frequencies and also where the same period payroll is submitted at varying times or if fragmented for submission due to delayed processing for some employees. Payroll Submission Data Item Payroll Run Reference Detail Used to identify the Payroll event that the submission refers to e.g. Site 1 Week 1. Allows employers to get summary totals for payroll runs even if there have been corrections or multiple submissions for that logical payroll run. On completion of the periodical payroll, the employer will create the Payroll Submission on or before the associated payment date. The employer will poll (log request with Revenue server and wait for a response) the Revenue Employer Service in order to submit the file. This will be facilitated either through an in-app payroll software solution, or by logging in to ROS to perform an upload, in the same manner as is currently performed to file the P35. Revenue will acknowledge the submission and validate the contents of the file which it will either reject, due to file structure errors, or accept as structured correctly. If validated, the Payroll Submission file will be accepted by Revenue for processing. The processing of the file contents may identify errors in the employee data reported, this will be flagged to the user through their Employer Services account with ROS.

16 5.5 Incorrect Payroll Submissions The PAYE system operates on the basis of when and what payment is made. An actual under or overpayment is not a correction for PAYE Modernisation purposes. PAYE, USC, PRSI and LPT should be deducted on the basis of the actual payment made and when it is made. No correction is required where an employee is underpaid in a week and this is rectified in the next payroll run as the original submission truly reflects the payment transacted at the time. Within the Payroll Submission each employee is included on a line by line basis, each employee record is referred to as a line item within the submission file. Each line item has its own identifier (this will be automated by your payroll software). Corrections to Payroll Submissions will always operate as a delete and refile process. This means that if a Payroll Submission is submitted declaring an incorrect reflection of the actual events then you do not submit a replacement entry, you must submit an instruction to delete the original item and then submit a new Payroll Submission item with the correct reflection of the true payment. If there is a genuine reporting error in the Payroll Submission, i.e. the submission does not reflect the actual payment made in the period, then a submission can be made instructing Revenue to delete the line item, by its identifier, including the replacement line item to reflect the true payment for the period. Important Note: Employers should always adopt Revenue s fundamental principle for PAYE Modernisation of follow the money. If an employee s wage is processed incorrectly for a period, however, the employee was paid based on the incorrect wage processed then this Payroll Submission is correct as it reflects the funds which were actually paid to the employee, i.e. the Payroll Submission agrees to the money paid to the employee. The error in the processed wage, for example the incorrect processing of hours, should be carried forward to be included in the wage processed for the subsequent pay period. 5.6 Varying Payroll Frequencies Depending on the payroll frequencies used within your organization you may have varying payroll frequencies, for example weekly, fortnightly, quarterly, four-weekly and monthly. On completion of processing payroll for the period, you must ensure that your Payroll Submission is completed on or before the actual funds for the period are made available to the employee. If your weekly and monthly payroll are completed on the same date, with coinciding payment dates, you do not have to merge them for the purpose of the Payroll Submission. A separate Payroll Submission can be created for each pay frequency as the Payroll Run Reference (referred to in 5.4) will ensure that each file is identified as a unique and separate submission.

17 5.7 Payments at irregular intervals The current regulations relating to the allocation of tax credits and SRCOP will continue to apply under the new scheme. There will be no requirement to report for employees in a period where no payment is made, the only inclusions in a Payroll Submission are; Those employees for whom a salary is processed even if the net pay is nullified by deductions Those employees who receive a payment in the period Any employee who ceases employment and for whom a payment is processed or made. Any employee who ceases employment, for whom no payment is processed or made, but for whom a cessation date is being reported. Any employee who has already ceased employment, whether previously notified to Revenue or not, and for whom a post-cessation payment is processed or made. 5.8 Payments made other than on the employee s regular pay day Currently, where a payment is made on a different day from the regular pay day, the employer may amend the pay period ensuring that the tax credits and SRCOP are allocated wholly against all payments made up to the date of the additional payment. If the amount of the additional payment is small, in comparison with the payment to be made on the next regular pay day, Revenue would not object to making the payment in full (i.e. without deductions) provided that it was included in full in the pay figure for PAYE/USC/PRSI purposes, and the correct deductions made, on the next pay day. This is straightforward as the payroll can be amended with the totals only being reported in full at the end of the year. With the introduction of PAYE Modernisation it is important to comply with the reporting requirement of before or on payment date. For this purpose, as each Payroll Submission requires the full disclosure of items comprised in the payroll period to calculate the payment for each employee on a line by line item basis, this additional payment would require an additional Payroll Submission, albeit for just the one employee. If you have an irregular payment date, for example, a payment is made to a monthly paid employee in the middle of the month, then a Payroll Submission must be made to include all payments made on this date and submitted to Revenue on or before this additional payment date.

18 6. PERIODICAL PAYMENTS TO COLLECTOR GENERAL 6.1 P30 P30s in their current form will be discontinued from 01 st January However, the requirement to make payment to Revenue, in the same frequency as currently allocated to you (i.e. monthly, quarterly, annually) will continue to apply. Employers may be advised to change the frequency of payment from 01 st January Employer Statements In place of the P30 declaration, whereby the employer currently advises Revenue of the PAYE, USC, PRSI, LPT deductions and makes payment, Revenue will already hold this information from the submission of the Payroll Submissions made in line with each payment date. Revenue will automatically issue an Employer Statement which will collate the PAYE, USC, PRSI and LPT liabilities from the individual Payroll Submissions, with a payment date within the specified tax return period. The details of the statement shall on the return date, or where the statement is issued after the return date, on that later date, be deemed to be a return made by the employer in respect of that income tax month. Dates Detail Return Date In relation to an income tax month, the return date means the day that is 15 days from the last day of the income tax month. Due Date In relation to an income tax month, the due date means the day that is 15 days from the last day of the income tax month or the day that is 24 days from the last day of the income tax month when filing electronically. 6.3 Employer Statement Reconciliations Revenue will provide a complete list of the Payroll Submissions received which have been applied to create the statement. The employer must sign and submit the statement arranging payment. Employers will have complete transparency of the all transactions submitted to Revenue through the online ROS Employer Services account, including: Payroll Submissions Employee items submitted Errors or warnings within submissions Submissions which are applied to create the Employer Statement Employers will have access to download all submissions made to Revenue, in order to complete any reconciliation process required, to query and agree liabilities calculated for the purpose of the Employer Statement.

19 6.4 Payment of tax by direct debit The Collector-General may enter into an agreement with an employer to pay, by monthly direct debits, in respect of all the income tax months occurring in a year of assessment, where the following conditions are met; a) the total monthly payments represent, based on the best estimate of the employer, the total amount of tax due under this Chapter in respect of those income tax months, b) each monthly payment is made prior to the due date in respect of the income tax month prior to the income tax month in which the payment is made, c) the employer has complied with all compliance regulations. The balance of any tax due, after deducting all monthly payments must be settled prior to the due date for the final income tax month in the year of assessment. However, the agreement shall be null and void where the total amount of monthly direct debits paid by the employer in respect of the income tax months occurring in the year of assessment is less than 90% of the tax due in respect of those income tax months.

20 7. PAYE MODERNISATION AND EMPLOYEES 7.1 Statements to Employees From April 2019, Revenue intend to issue a statement to each employees myaccount based on the Payroll Submissions made by their employers. The statement will be issued in line with the Payroll Submissions received, thus in line with the employees pay frequencies and payment dates. Each periodical statement will reflect the Gross Pay (as defined by Revenue) and the statutory deductions applied to the Gross Pay in that period. The statement will not necessarily reflect the payslip issued to the employee by the employer as the payslip often contains non-revenue related items, such as the reimbursement of travel expenses. 7.2 Employee Declaration of Cessation of Employment A facility will be provided in the individuals PAYE services portal, myaccount, enabling employees to submit a declaration of cessation of employment with an employer. This specifically addresses historical issues where employers delay the issuing of the P45 to employees. Once the employee makes a declaration of cessation with the selected employer, their tax credits will be unallocated from the employer. This enables the employee to allocate the tax credits to a new or secondary employment or to a spouse in the case of joint assessment. This service to individuals does not relieve the employer of their obligations to submit a cessation date within the Payroll Submission In-Year Reconciliation Presently Revenue intend to carry out automatic end of year reviews for all employees. In early January each year, Revenue will make available an online statement outlining pay and deductions (PAYE, USC and LPT) based on employer submissions for the previous year. This will include salary, taxable DEASP payments and any income coded against tax credits, SRCOP, as well as any credits and reliefs granted to the employee. Employees should declare any additional income earned in the year and may claim additional credits, deductions or reliefs where applicable. Employees will be required to file a return in order to claim any additional credits/reliefs and get a refund. Any underpayments will be coded forward to the tax year subsequent to the year of assessment and any overpayments offset or refunded.

21 8. MISCELLANEOUS 8.1 DEASP Income As part of the PAYE Modernisation project and, as a consequence of the introduction on GDPR, on 25 th May 2018, the reporting of DEASP income, most commonly Illness Benefit, changed with effect from 01 st January Employers are no longer required to report Illness Benefit claimed and received by employees from DEASP. DEASP will report such claims to Revenue who in turn will adjust the employees Tax Credit Certificate to capture any necessary PAYE due on the claim (DEASP benefit payments are not subject to USC or PRSI). Therefore, where employers are in receipt of the Illness Benefit, they must ensure that this portion of pay is not subjected to a PAYE deduction by them as Revenue are collecting this through a Tax Credit and SRCOP adjustment. From 2019, it will be necessary for the employer to continue to poll for an RPN for amendments to the Tax Credits and SRCOP prior to processing each periodical payroll for affected employees. 8.2 Employment ID PAYE Modernisation sees the introduction of varying new data items, one of the most important is the Employment ID. The Employment ID is a unique identifier for each separate instance of an employees PPSN within the payroll. This unique identifier eliminates the requirement to merge PPSN within submissions, as the ID will be linked to each instance of concurrent employments and each period of employment with a single employer where there are recommencements within the same tax year. Payroll software solutions will automate the creation of the Employment ID, in order to create a ROS compliant structure to the alpha numeric string, and also to maintain uniqueness of the ID across employees and employments. Where a payment is made to an employee after they have ceased employment, the post-cessation payment should be reported against the same Employment ID as the ceased employment to allocate the payment and deductions against the same employment record and to avoid re-commencing a new term of employment with the employer for the additional payment. Important Note: The Employment ID must be unique for each occurrence of a PPSN and cannot be duplicated or repeated against another PPSN within the same tax year. In the event that an employer changes Payroll Software within the tax year, they must ensure that the Employment ID linked to an employee is applied to the employees record within the new software solution.

22 8.3 Dual Employments Dual employments occur where an employee has separate employments with the one employer, this can be determined by separate concurrent employment contracts or pay arrangements based on the organization of work within the organization. This is most notably operated within payroll as an employee set up multiple times within the one payroll solution, or across varying departmental payrolls, within the organization. In some cases, employers may incorrectly allocate the same P2C to each instance of employment thus duplicating the allocation of the same tax credits (over-allocation). In other cases, employers may apply the P2C to one instance of employment leaving the secondary instance with zero tax credits which may result in over-deductions. Currently, where these dual employments are correctly registered with Revenue, the P2C will issue with the employees PPSN denoted with a T and X for up to (and limited to) three instances of employments at a time. PAYE Modernisation addresses this complex issue. Under PAYE Modernisation employers must register and process any such instances of dual/multiple employments for a single employee allocating a separate Employment ID to each employment. The introduction of the Employment ID will aid the reporting of such arrangements and enable Revenue to allocate the correct tax credits across the employees active Employment IDs. The periodical Payroll Submission will allow the inclusion of the same PPSN multiple times once each occurrence has a separate Employment ID. Payroll software solutions will automate the creation of the Employment ID in order to create a ROS compliant structure to the alpha numeric string and also to maintain uniqueness of the ID across employees and employments. 8.4 Emergency Tax Fewer circumstance of Emergency Tax will apply under PAYE Modernisation due to real time updates to employee records. The current Emergency Tax operational guidelines will apply in 2019, however, as employers will poll/request an RPN for new employees, prior to each payroll period for these new employees, Revenue will be notified of the employee s employment and the employer will receive up to date tax credit on each request. New Employee with no PPSN While current regulation requires employer to hold minimum information for a new employee, this is not always operated correctly by employers. From 2019, the RPN request process mandates the collection of this information as a minimum in order to complete the initial process of the RPN request for a new employee: Employee Name Employee Address Employer Reference (Works number) Date of Birth If Payroll Submissions continue to be submitted without an Employee PPSN, Revenue will trigger relevant compliance interventions.

23 P35 All employers will file a P35 for the tax year ending 31 st December 2018 in the same manner as previous tax years. The current ROS filing deadlines will continue to apply for this 2018 submission. From the 2019 tax year, the P35 will be discontinued. The continuous submission of the Payroll Submissions fulfills the P35 criteria making this form redundant from 2019.

24 APPENDIX A LIST OF EMPLOYEES

25 APPENDIX B RPN

26 APPENDIX C PAYROLL SUBMISSION ITEMS Payroll Submission - Items for inclusion (draft proposal and is subject to change) Data Item Description Purpose Employee PPSN The registration of the employee (up to 9 chars). Must be valid PPS number. Format is 7 digits (including leading zeros) followed by either 1 or 2 letters. This field will be mandatory unless the Employee doesn t have a Employee PPSN when making the payment. If submissions continue to be received with no Employee PPSN, relevant compliance interventions will be triggered. Used to identify employee to which the submission relates. In conjunction with Employer Registration Number and Employment ID. Will be used to see if employment record exists. First Name The First name of the employee. Where there are errors/ mix ups, the name will help the employer helpdesk when correcting a record. Family Name The Family name of the employee. Where there are errors/ mix ups, the name will help the employer helpdesk when correcting a record. Address Date of Birth Employer Reference Employment ID Employment Start Date The address of the employee. This will be Mandatory if the Employee PPSN isn t available. The date of birth of the employee. This will be Mandatory if the Employee PPSN isn t available. Employee internal staff identifier. This will be Mandatory if the Employee PPSN isn t available and must remain unchanged in all submissions received until the Employee PPSN is available. Unique identifier as previously advised by the employer to Revenue which identifies the employment, differentiating between dual employments with the one employer. It is Mandatory if the Employee PPSN is available. Only fill this in the first time you pay a new employee or if there is a correction being made to the Employment Start date in a subsequent payroll run. Where there are errors/ mix ups, the address will help the employer helpdesk when correcting a record. Where there are errors/ mix ups, the DOB will help the employer helpdesk when correcting a record. Used to uniquely identify the employment of an employee with an Employer where a Employee PPSN is not included. Used to uniquely identify each employment for the employee. Will be used in conjunction with the Employer Registration Number and the Employee PPSN to see if employment record exists. Establishes the start date for the employment. Will be used in conjunction with other employment details held by Revenue to determine if credits and rate bands need to be reallocated to this new employment.

27 Data Item Description Purpose Date of leaving Pay Date Pay Frequency RPN Number Standard Rate Cut Off Point this period Report this date when an employee is leaving (date contract terminates) or if employer ceases trading. Date Employee is being paid (YYYY- MM-DD). In the case of an individual paid by cash, it is the date the cash is given to the employee. Where payment is made by bank transfer, it is the date on which the funds are scheduled to be made available in the individual s bank account. In the case of a cheque, it will be the date on the cheque. Where payday falls on a bank holiday and an employee is due to be paid by funds transfer on that day, Revenue would regard the payday as that bank holiday where the funds are made available to the employee in his or her bank account on the previous day. Option include: Weekly, Fortnightly, Monthly, Four- Weekly, Twice-Monthly, Quarterly, Bi-Annual, Week-based Monthly, Annual, Other The number of the Revenue Payroll Notification (RPN) used to calculate deductions. This is mandatory when the RPN is used. Amount of Standard Rate Cut Off Point available for use in the PAYE calculation. Where the employee is taxed on a week 1 basis, this will be the standard rate cut off point for the pay period. If the employee is taxed on the cumulative basis, this will be the cumulative standard rate cut off point for the pay period. This is mandatory when the RPN is not used. Establishes the leaving date for an employee. Will be used in conjunction with other employment details held by Revenue to determine if credits and rate bands need to be reallocated from this employment. Used to determine which remittance period the submission belongs to and for pre population of the employer return. Used for employee in-year reconciliations and to determine the payment against which, for example, Local Property Tax and illness benefit should be applied. Other should only be used where the payment frequency does not fall into one of the categories listed or the frequency of payment is unpredictable e.g. ARFs and income continuance payments. Used to determine that the correct instructions are being operated. Used to determine that the correct instructions are being operated.

28 Data Item Description Purpose Tax Credits this period Income Tax Calculation Basis Exclusion order Gross Pay Amount of tax credits available for use in the PAYE calculation. Where the employee is taxed on a week 1 basis, this will be the tax credits available for the pay period. If the employee is taxed on the cumulative basis, this will be the cumulative amount of tax credits for the pay period. This is mandatory when the RPN is not used. Options include: Cumulative Week 1 Emergency. This is mandatory when the RPN is not used. This indicates that the Employer does not have to deduct Income Tax for the Employee. This is mandatory when the RPN is not used. Employee Gross Pay. Gross pay is the employee s pay of any kind, including notional pay and share based remuneration and before any pension contributions or salary sacrifice deductions are made. Chapter 3 of the Employers Guide to PAYE (link below) details the different types of pay that would be included. Used to determine that the correct instructions are being operated. Used to determine that the correct instructions are being operated. Used to determine that the correct instructions are being operated. Used for the generation of the employee end of year statement. Pay for Income Tax Income Tax Paid Pay for Employee PRSI Pay for Employer PRSI Employee is exempt from PRSI in Ireland Chapter 3 of Employer's Guide to PAYE Gross pay reduced by allowable superannuation contributions, income continuance contributions, relevant reliefs such as SARP and approved salary sacrifice. Employee Tax deducted or refunded in this employment. Negative if tax refunded. Pay subject to employee PRSI. Generally the same as gross pay for income tax purposes including notional pay and share based remuneration and before any employee pension contributions or salary sacrifice deductions are made. Pay subject to employer PRSI. Excludes share-based remuneration. This field allows for the filing of returns for employees who are exempt from paying PRSI in Ireland. Used for the generation of the employee end of year statement Displayed to employee through PAYE Services. Used for the generation of the employee end of year statement and for the pre-population of the employer. Used for the generation of the employee end of year statement. Used by DEASP Used for the generation of the employee end of year statement.

29 Data Item Description Purpose PRSI Exemption Reason PRSI Class and Subclass Insurable Weeks Employee PRSI Paid Reason for the PRSI Exemption in Ireland. This is Mandatory if PRSI exempt. Options include: A1 Portable Document from EU Member State Certificate of coverage under Social Security Bilateral Agreement Notification of exemption for posted workers, other than above Employment of certain family members Under 16 years of age Employment on certain social welfare schemes Other PRSI Class and subclass for insurable weeks worked. PRSI subclass is determined by level of pay. Insurable weeks required where class is provided. This is Mandatory if not PRSI exempt. Can occur more than once per payslip. Number of insurable weeks worked for each PRSI class accrued in this pay period. This is Mandatory if not PRSI exempt. Can occur more than once per payslip. Employee PRSI deducted. This is Mandatory if not PRSI exempt. Used by DEASP Used by DEASP Used by DEASP Displayed to employee through PAYE Services. Used for the generation of the employee end of year statement and for the pre-population of the employer return. Employer PRSI Paid Employee PRSI calculated. This is Mandatory if not PRSI exempt. Used for the pre-population of the employer return. Pay for USC Includes notional pay and all Superannuation and Income Used for the generation of the employee end of year statement. Continuance Scheme Contributions. Excludes DSP payments, Illness Benefit and payments of a similar nature under certain approved schemes. USC Status Ordinary or Exempt Used for the generation of the employee end of year statement. USC Paid USC deducted or refunded in this employment. Negative if USC refunded. Mandatory if not USC exempt. Displayed to employee through PAYE Services. Used for the generation of the employee end of year statement and for the pre-population of the employer return.

30 Data Item Description Purpose Gross Medical Insurance paid by Employer Pension Tracing Number Amount contributed by Employer to retirement benefit scheme Amount contributed by Employee to retirement benefit scheme Amount contributed by Employer to PRSA scheme Amount contributed by Employee to PRSA scheme Amount contributed by Employee to RAC scheme Amount contributed by Employee to AVC scheme Share Based Remuneration Gross Medical Insurance paid by Employer for the Employee. This is mandatory if applicable. The format of the pension tracing number is PBXXXXXX, where XXXXXX is a number with up to 6 digits. E.g. PB1234. This is mandatory if applicable. Should only be provided when the Employee joins a pension or changes pension. Can occur more than once per payslip. Amount contributed by Employer to retirement benefit scheme for the Employee. This is mandatory if applicable. Amount contributed by Employee to retirement benefit scheme. This is mandatory if applicable. Amount contributed by Employer to PRSA scheme for the Employee. This is mandatory if applicable. Amount contributed by Employee to PRSA scheme. This is mandatory if applicable. Amount contributed by Employee to RAC scheme. This is mandatory if applicable. Amount contributed by Employee to AVC scheme. This is mandatory if applicable. This is share-based remuneration consisting of shares in the employer company or a company that controls the employer company that is included in Gross Pay. This is mandatory if applicable. Used to cross-check amount paid when the Employee applies for medical insurance relief credit. Required by Pensions Authority. Statutory reporting requirement. Statutory reporting requirement. Statutory reporting requirement. Also required when calculating tax relief due when an individual submits a claim for tax relief on contributions not relieved by the employer under the net pay arrangement. Statutory reporting requirement. Statutory reporting requirement. Also required when calculating tax relief due when an individual submits a claim for tax relief on contributions not relieved by the employer under the net pay arrangement. Statutory reporting requirement. Also required when calculating tax relief due when an individual submits a claim for tax relief on contributions not relieved by the employer under the net pay arrangement. Statutory reporting requirement. Also required when calculating tax relief due when an individual submits a claim for tax relief on contributions not relieved by the employer under the net pay arrangement. Statutory reporting requirement.