Ireland has introduced the most significant reform to its Pay as you Earn (PAYE) system since the 1960s, ushering in a new means of reporting employee tax and pay information to the Revenue.
As of 1 January this year, the country has simplified its reporting process, moving away from the submission of paper forms towards a digital approach known as the ‘Employer Submission Mechanism’. Although dealing with the shift will primarily depend on upgrading payroll software functionality, employers will also be subject to some new responsibilities too, according to Activpayroll.
Therefore, while the pay process itself will remain broadly unchanged, certain technical details may affect the way professionals manage the payroll process. For example, under the old PAYE system, P30, P35, P45, P46, and P60 forms had to be completed and submitted to the Revenue as part of the overall reporting process.
But under the new system, it will no longer be necessary to submit ‘P’ forms. Instead Revenue Payroll Notifications (RPN) will be downloaded from the Revenue with the relevant information before payroll is processed. The information in the RPN file will be used to update employees’ personal records to ensure they are taxed correctly in line with the Revenue’s records.
Once payroll has been signed off, the payroll submission file must be uploaded to the Revenue before employees can be paid. The information in this file will be used to update their personal records and create the employer’s Statement of Account, which will be issued by the 5th of the following month. The Statement of Account can also be linked to a Revenue Online Service direct debit mandate and used to collect payments on the 23rd of the following month – this used to be handled via a P30 return.
Based on previous tests, the Revenue expects the response time for file uploads to be between 10 and 15 seconds. It will not be possible to make changes to payroll once the file has been uploaded. Adjustments, if required, must be made in the following period.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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Ireland has introduced the most significant reform to its Pay as you Earn (PAYE) system since the 1960s, ushering in a new means of reporting employee tax and pay information to the Revenue.
As of 1 January this year, the country has simplified its reporting process, moving away from the submission of paper forms towards a digital approach known as the ‘Employer Submission Mechanism’. Although dealing with the shift will primarily depend on upgrading payroll software functionality, employers will also be subject to some new responsibilities too, according to Activpayroll.
Therefore, while the pay process itself will remain broadly unchanged, certain technical details may affect the way professionals manage the payroll process. For example, under the old PAYE system, P30, P35, P45, P46, and P60 forms had to be completed and submitted to the Revenue as part of the overall reporting process.
But under the new system, it will no longer be necessary to submit ‘P’ forms. Instead Revenue Payroll Notifications (RPN) will be downloaded from the Revenue with the relevant information before payroll is processed. The information in the RPN file will be used to update employees’ personal records to ensure they are taxed correctly in line with the Revenue’s records.
Once payroll has been signed off, the payroll submission file must be uploaded to the Revenue before employees can be paid. The information in this file will be used to update their personal records and create the employer’s Statement of Account, which will be issued by the 5th of the following month. The Statement of Account can also be linked to a Revenue Online Service direct debit mandate and used to collect payments on the 23rd of the following month – this used to be handled via a P30 return.
Based on previous tests, the Revenue expects the response time for file uploads to be between 10 and 15 seconds. It will not be possible to make changes to payroll once the file has been uploaded. Adjustments, if required, must be made in the following period.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER STORIES THAT MAY INTEREST YOU
Irish employers urged to prepare for PAYE revamp
Income tax may need to rise if Irish economy grows too quickly, warns IFAC
Ireland denies being tax haven despite low tax rates enjoyed by top companies
