Revenue is introducing a new PAYE Modernisation system for employers from 1 January 2019.
If you employ staff, it will have huge implications for your business and the way you pay them. If you’re a company director, it will also impact how your company pays your salary.
The new system will require you to notify Revenue online of all gross wage and salary payments, before you pay a net wage to an employee or director
In each case, the Revenue’s online system will automatically check the employee or director’s available tax credits and cut-off points, and notify you of the deductions to be made before you pay them their net wages.
You will need to follow this procedure every time you pay wages or salaries, on or before each pay day. You can do this either through payroll software or by logging on to ROS.
All the current PAYE forms (P30, P35, P60, P45 etc) will be abolished from next January. Instead, Revenue will add up the pay details you disclose to them in each payroll run and will issue you with a statement at the end of each month.
This will become your monthly payroll tax return, replacing the P30 form.
You will have 14 days each month to review this statement and investigate any errors/discrepancies, before you pay over the PAYE/PRSI/USC to Revenue. The existing tax payment dates will remain unchanged.
There are a number of steps that you will need to take, to prepare for the changes in January. These are outlined in a very useful Irish Tax Institute Guide, which I recommend you follow carefully.
Your Employee List
Using ROS, you must first submit a clean and complete list of all your employees to Revenue by 31 October, so you can be ready to go live next January.
Before doing so, first check the Revenue Guidelines.
While preparing your employee list, you must ask yourself the following questions:
- Do you have a (P2C) for every employee?
- Do you have correct PPS numbers for each of your employees?
You can check whether a PPSN is correct, by using Revenue’s PPSN checker on ROS, or here.
- Are you using a current Tax Credit Certificate (P2C) for each employee?
You can use ROS to check whether Revenue has issued a new P2C.
- Have you issued a P45 to individuals who no longer work for you?
- Does the list include all employees, including directors?
If this exercise reveals any problems or irregularities, you will need to resolve these as soon as possible.
Keeping Your Payroll in Order
Once you have completed and filed your employee list, you will need to keep your payroll details fully correct and updated into the future.
- Informing Revenue when you take on a new employee or when an employee has ceased employment.
- Keeping a Register of Employees at your business address.
- Checking ROS for new P2C Tax Credit Certificates before each payroll run between now at the end of 2018.
- Strictly adhering to all PAYE formalities in the meantime.
This is important as there are serious fines for breaches. (€4,000 per breach).
Revenue have promised that the new system will make life easier for employers. That may or may not turn out to be true in the long term. However in the meantime, it will involve a lot of difficulty and the new €4,000 fines for breaches of PAYE regulations mean that Revenue intend shoving the responsibility for all mistakes and irregularities onto you, the employer.
Start preparing now – it’s essential.