The New Irish Payroll System: PAYE Modernisation

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PAYE Modernisation, or Real-Time Planning, was introduced as the new payroll system in Ireland in January 2019.

But how do these changes affect you?

If you’re an employer you will need to know and apply the changes. If you’re an employee, you will no longer receive filing forms like P60s or P45s.

The changes mean payroll is moving into the 21st century. Payroll will be now be completed online, allowing your employees to see your pay and tax in real time on Revenue’s website.

So, what changes did PAYE modernisation bring?

  1. You need to report your employee’s taxes and pay to Revenue on or before their pay day.
  2. The new Revenue Payroll Notification (RPN) gives employers the information they need to deduct tax from their employees. This is replacing the current P2C tax credit certificate.
  3. Every employee in a business will now have a unique number. This is called The Employment Identifier and is included in the payroll submission and RPN. This number will help identify anyone who has ended and begun employment in the same year with the same company. It will also help distinguish anyone who has multiple employment in a business.
  4. An Earning and Deductions Certificate will be introduced. This is replacing current filing forms like P60s, P45s and P30s. You can also find this certificate in My Account on Revenue’s website.

 

Is there anything I need to do as an employee?

As an employee, you should set up My Account on Revenue’s website. My Account shows you the tax credits available to you, your Earning and Deduction Certificate and information about your tax. It’s not necessary to create an account but it will be useful for you.

What do I need to know about PAYE modernisation as an employer?

MyAccount

Every employer needs to register on MyAccount on Revenue.ie. You must report your employee’s income on MyAccount. You can also view your Pay As Your Earn Liability through MyAccount.

 

Reporting to revenue

On the day of, or before, each employee is paid, you need to report;

  • the amount they are being paid,
  • the date they are being paid and
  • the amount of tax deducted.

 

Payroll software

If you use payroll software, there are two ways to report to Revenue;

  1. Direct Payroll Reporting: This means your payroll software will automatically share employee information with Revenue.
  2. ROS Payroll Reporting: You can upload files created on your payroll software to ROS.

You can talk to your software provider and accountant about the new ways to report with software.

If you don’t use a software, you will be able to complete a form on ROS using Revenue Payroll Notifications (RPNs).

Do I need to make changes?

You will only need to make changes for PAYE Modernisation if you;

Have Employees On Flexible Salaries

You will now need to know what your employees will be paid before they are paid. So, if your employees are paid hourly, you will need to work out how many hours they will work during the pay period and report that to Revenue.

Report Your Payroll Manually

If you have been reporting manually, you will need to move online. If this is not an option for you, you can outsource your payroll to a reputable company.

What can I do as an employer?

1. Keep your Payroll Files Up-To-Date

  • Revenue will do on-site checks to ensure your payroll is up-to-date and has been reported.

2. You can set up a direct debit with revenue

  • This allows Revenue to automatically remove tax payments from your account, cutting down on some of your work. You can speak to your accountant or payroll provider about this option.

3. Set up MyAccount

  • So you can report your employees’ income and so they can view their income and taxes.

4. Accounting software

  • Make sure all employees are set up correctly on your accounting software before they are due to be paid.

Summary

If you are an employee you should set up My Account to keep tabs of your taxes.

As an employer you have to report employee’s taxes and pay to Revenue on or before the day they are paid. You also need to set up My Account on Revenue before January, 2019.

If you have questions or some additional queries about the new PAYE system, let us know by emailing us at hello@accountantonline.ie or by calling our Client Services team on (01) 905 9364. 

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