Announced in the budget in 2016, PAYE Modernisation is finally coming and will take effect on 1st January 2019. It is the biggest change to the Pay As You Earn (PAYE) system since it began back in the 1960s.
It will completely modernise the PAYE system as you know it. Employers will now have to report payroll information to Revenue in ‘real-time’ i.e. each time they pay their employees. The new obligations mean that every employer will now have to submit an “Employer Submission” to Revenue each time an employee is paid.
What does it really mean?
Real time reporting (RTR) as it otherwise is known, means that all employers will report pay, tax and other deductions as well as details of employees leaving the organisation every time they run their payroll. The ‘employer submission’ will contain information that is similar to the annual P35 return.
Why is it happening?
While it might not seem like it now, it’s aim is to minimise the tax compliance burden. Timely and correct returns benefits everyone – the employer, the employee and Revenue.
What are the implications for you as an employer?
Every time you pay your employees, you must upload the information to Revenue. You will also be obliged to file a statutory employer return. This has to be submitted by the 14th of the following month. It will detail the total PAYE, USC, PRSI and other deductions from each employee during the month.
Then shortly after month end, Revenue will issue a monthly statement, which will be deemed to be the return. Payment of all monies must be paid by the 23rd of that month.
With real time reporting, the P forms will become redundant. That includes P45, P35 and P60. With the advent of RTR comes the abolition of all “P” forms, simply because the operations that they performed will be defunct under RTR.
What you need to do
With less than 2 months to prepare, every employer should make PAYE Modernisation a key priority.
This is a massive change. As an employer, you are used to reporting on an annual basis and now you move to monthly returns. Software will help with this. However, you need to be careful which software you use, not all software are the same.
There is a lot to take in but we at TaxPlus Accountants can help ensure a seamless transition to the new system so please get in touch with us here (link to the contact us page).