A new PAYE system/relationship is now in place between the Revenue, employer and employee since the implementation of PAYE modernisation which commenced on the 1st. of January 2019. The employer is now required to report their employees’ pay and deductions to Revenue as they are being paid.

This significant change according to Revenue makes it easier to deduct and pay at the right time the accurate amount of employees Income Tax, Pay Related Social Insurance, Universal Social Charge and Local Property Tax This new real time reporting system is now compulsory and operating and all business processes and practices have to be in place to meet the Revenues obligations.

According to Revenue the PAYE modernisation improves the streamlining of business process. As this reporting system is immediate it reduces the amount of administration involved in meeting the PAYE reporting obligations. Example of this is the abolishment of these forms: P30, P45, P35, and P60.

The System

Under this old system an employee completed a form 12A when they commenced their first job. When an employee moved to another position their employer issued a P45. A P60 form was issued by the employers for each employee on 31st December with details of their gross pay, PAYE, USC and PRSI paid both employer and employee share. Monthly the employer had to issue a P30 to revenue which showed the PAYE, USC and PRSI paid each month and at the end of the year the employer send Revenue a P35 showing PAYE, PRSI and USC paid for the year.

Now if you are an employer or payroll agent you are responsible for the delivery for this new system, this is the methodology in processing this new PAYE order. RPN (Revenue Payroll Notification) has now replaced the PC2 which displays the employee’s up to date tax credit and cut of point.

It is necessary for the RPN to be updated, before the payslips are completed for that pay period, and subsequently updated. The PRN is then submitted to Revenue, which offers periodic payroll information for each employee that has received wages during that pay period, showing their gross wages and deductions. Revenue then issues a statement to show the amount of liability each month.

Overall

In conclusion, employers, employees and Revenue will benefit from accurate, updated information relating to pay and statutory payroll, offering a transparency of the PAYE system for all stakeholders. Further information can be obtained directly from the Revenue website: https://www.revenue.ie/en/employing-people/paye-modernisation/index.aspx

This article was written by Nuala McGowan a fully incorporated Accountant and Tax adviser. If  you have any questions in relation to this article or if you need any other accountancy related advice Nulala can be reached at http://www.mcgowanaccountancy.com/  or by telephone on +353 90 66 25818.