The Irish PAYE system was first implemented back in 1960 with no major changes since its introduction. For the past few years, Revenue has been working on a much needed and well overdue facelift of the Irish PAYE system. The new system, known as PAYE Modernisation, will replace the existing PAYE processes from 1st January 2019. With this deadline fast approaching, many employers are left confused about what the new PAYE system will entail for their business.
Key Changes with PAYE Modernisation
Essentially, all of the current ‘P Forms’ - P30s, P35s, P60s, P45s and P46s - will be abolished, and in their place will be real time submissions to Revenue. These will be known as Payroll Submission Requests (PSR) and will need to be submitted ‘on or before’ the date an employee is paid each pay period. In most cases, this means a file will be submitted either weekly or monthly.
- As Revenue will be receiving file submissions each pay period, the annual P35 will no longer be required. In addition, this periodic file will eliminate the need for P30s.
- The files being submitted each pay run will also have details of employees commencing and leaving employment. This will mean that P45s and P46s are no longer required to be completed by the employer.
- At the end of a tax year, the individual taxpayer will be able to view and print their official certificate of earnings and deductions directly from the MyAccount portal on the Revenue website. This means that P60s should no longer be needed.
The retrieval of tax credits will also change, with a Revenue Payroll Notification (RPN) replacing the current tax credit certificate (P2C). Employers will be required to always use the most up-to-date RPN when calculating employees’ pay and deductions.
Regardless of how frequently an employer will be required to send submissions to Revenue, the payment date will remain the same. There will be no change to the method that employers currently use to make the Revenue payment.
PAYE Modernisation with Payroll Software
PAYE Modernisation should not add to an employer’s workload. Payroll software that caters for PAYE Modernisation will improve and streamline the payroll communication between employers and Revenue. Employers using payroll software that is Revenue compliant will be able to create and send the periodic PSR submission directly to Revenue from the payroll software at the click of a button.
This integration with Revenue will also allow employers to automatically retrieve RPNs for employees from within the payroll software. Changes to an employee’s tax credits and cut-offs can then be updated in the payroll software with just one click. Payroll software will also be able to identify employees who are on the RPN but not set up in the payroll system and enable the user to set up these new employees in the payroll software instantly.
Interested in finding out more about PAYE Modernisation? Join Thesaurus Software and Revenue for free PAYE Modernisation training webinars.
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