PAYE Modernisation is coming and it will affect every employer in the country. It will come into effect on January 1, 2019, and is the most significant reform of the PAYE system.
In a nutshell, Revenue is introducing real world reporting, which means that Revenue, employers and employees will have the most accurate, up-to-date information relating to pay and tax deduction. Tax deductions include income tax, PRSI, property tax and USC.
It was first introduced in October 2016 and was given a firm footing in the Budget last year. Since then, the Department of Finance has committed €50 million to the project in Budget 2018.
So what does it really mean?
It means that every time an employee is paid, as an employer, you will be required to submit an online return via a payroll submission file to Revenue. So, whether your employee gets paid weekly, bi-monthly or monthly, you will submit information that is similar to the information that is contained on a P35 return. At the end of every month the employer will then be provided with a statement of account via ROS. This statement is required to be accepted by the Employer by the 14 of the following month.
Typically, in payroll, much of the reporting is done at the year end. This cumulative end of year reporting will not be needed as reporting accurate data will be done at each pay period.
Lets look at the benefits of PAYE Modernisation
- Reduce Administrative Burden
All your PAYE obligations will become part of the normal payroll process. This will eliminate the need to file payroll forms such as P30, P35, P45, P46 and P60.
After the real time reporting is submitted, the employer will get a statement showing all the deductions made on behalf of the employees in that month. This will become the employer return. So in essence, there will be 12 returns rather than the one annual cumulative return at year end.
- SMART PAYE
The Revenue are using the Acronym SMART to discuss the benefits of real time reporting. This is their stated benefits:
- Seamless integration into payroll.
- Minimise 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.
The deadline is set for 1 January, 2019. Revenue Payroll Notifications RPNs which are replacing P2Cs are being issued by Revenue in December 2018 in preparation for the change over in January 1, 2019.
If you are using a good payroll software system and all is up to date with your payroll processing, then there is little for you to worry about, but you do need to be fully aware of these changes and know the new steps to be taken in terms of compliance and new reporting requirements.
Revenue are planning on calling to all businesses who are registered as employers under PAYE/PRSI before the go live in 2019 and they are also conducting information seminars for employers to attend.
If you have any questions or unsure how PAYE modernisation will affect you, please get in touch with us here at AG Associates. We can walk you through the process and audit how your process can be managed to comply with the new real time reporting. We are here to help.
AG Associates is an accounting practice that specialises in affordable accounting and payroll solutions for the SME business owner. We have also launched a service Clarity, which combines online bookkeeping with offline accounting to provide an instant snapshot of how a business is doing right now.
For further information please contact Angela at Unit 11, Eastgate Way, Little Island, Cork. 021 4824723 or firstname.lastname@example.org.