PAYE Modernisation

Payroll is a complex and time-consuming operation at the best of times, but with the new system of PAYE Modernisation, it’s easy to understand why many employers feel challenged by the transition which came into effect on 1^st January, 2019. In fact, now is the ideal time to consider Payroll Outsourcing in order to successfully navigate the challenges ahead. PAYE Modernisation is a “real time” payroll reporting (RTR) system and involves the most significant change in payroll processing since the 1960’s.

Real Time Reporting:

From 1^st of January 2019, employers are now obliged to report their employees’ PAYE tax and deductions to Irish Revenue with real time reporting (RTR). Real Time Reporting effectively means that reports must be submitted in each pay period prior to paying employees. The new regime will also mean that employers will report details of any employees leaving their employment when they submit their payroll to Revenue. Employees will have full visibility of their payroll data submitted by their employer to Revenue in real time. Likewise Revenue will have access to complete data on each employee in every payroll cycle.

PAYE Online

The entire payroll process and interaction with Revenue will be online with automatic reporting of all payrolls to Revenue, who will have constant up to date information on each employee’s earnings from all employments. The rationale of employers calculating and reporting their employees’ pay and deductions as they are being paid is that it will make it easier to deduct and pay the correct amounts of taxes such as Income Tax, USC and PRSI at the right time.

The impact of PAYE Modernisation on Employers

PAYE Modernisation will involve an “Employer Submission” to Revenue each time an employee is paid. The Employer Submission will contain information similar to that which currently appears on an employer’s P35 return.
P30s, P35s and P45s will be abolished with employers submitting this information to Revenue electronically in the aforementioned Employer Submission.
Generation of P60s will also be abolished.
The final year for the P35 return is 2018 (submission deadline is 23^rd February 2019)

How will this change the current PAYE system?

Under the current Irish PAYE tax system, every employer needs to deduct Income Tax, Pay Related Social Insurance (PRSI), Universal Social Charge (USC) and Local Property Tax (LPT) from an employee’s’ gross pay. Before the commencement of the new system, each employer must provide a list of all their employees via ROS and also ensure that every employee is on the current P2C listing. The PAYE Modernisation system will overhaul and update the way employers process their PAYE information and how they submit this information to Revenue with a view to improving businesses’ PAYE reporting obligations with Revenue.

Payroll Outsourcing Costs:

Many companies dismiss the idea of outsourcing payroll as they feel that it will prove very expensive however payroll outsourcing costs per employee often work out considerably less expensive than employing a full-time payroll operator. odonnell+co’s payroll outsourcing service provides seamless integration and compliance with the new PAYE requirements and includes the following benefits:

Tax and compliance expertise;
The latest payroll software; and
Cost and time-saving efficiencies