PAYE Modernisation: The Changes Coming into Effect on January 1st, 2019

Continuing on with our series of posts about PAYE modernisation and preparing for PAYE modernisation, this post details the changes that are going to come into effect on January 1st, 2019. There are six main changes that will come into effect and these are related to 1. Revenue Payroll Notification (RPN), 2. Commencing and ceasing employees 3. Payroll submissions 4. Statements from Revenue 5. Returns and payment due dates 6. Corrections. We will now look at each of these changes in more detail, so you can rest assured that you are ready for PAYE modernisation to come on January 1st, 2019.

1.     Payroll Notification (RPN)

A Revenue Payroll Notification (RPN) will replace the current tax credit certificate (P2C). The RPN will provide you with the necessary information to deduct from the employee the correct:

-Income Tax

-USC

-LPT

The RPN will show:

-Tax credits

-Income Tax

-Universal Social Charge (USC)cut-off points

-Any previous pay, tax, and USC deducted from 1 January (unless cert the certificate is on a week 1 or month 1 basis)

-Income Tax and USC exemptions

-The amount of Local Property Tax (LPT)to be deducted, if applicable

Payroll software, including Intelligo’s own payroll software, Megapay, will retrieve the relevant RPNs from Revenue as part of the normal payroll process.

2.    Commencing and ceasing employees

From the 1st of January, the process for commencing and ceasing employees will be part of your normal payroll process. P45 and P46 forms will be no longer required. Revenue Payroll Notifications (RPNs) for new employees will be available in real time. This eliminates the need for emergency tax in most cases.

You are obliged to notify Revenue of any new employees. From the 1st January 2019, you can request an RPN for any new employees before their first payment. You can do this through your payroll software or ROS. This action will create the employment on our records and will provide you with the details required to calculate their payroll deductions.

The payroll submission will also include a field for commencement date. When an employee ceases their employment with you, you will input the date of leaving (cessation date) on the payroll submission. This eliminates the requirement for a P45.

3.    Payroll submissions

On or before you make a payment to your employee, you will report the payroll information to Revenue.

If you use payroll software, there are two methods of reporting payroll in real time:

Direct Payroll Reporting – allows payroll software to communicate seamlessly with Revenue Online System (ROS) and exchange the required information.

ROS Payroll Reporting – allows you to use files created by payroll software and upload these through ROS.

For each payroll submission, you must provide Revenue with payroll information for each employee, including:

-amount of pay

-payment date

-amount of Income Tax, Universal Social Charge, and Local Property Tax deducted.

4.   Statements from Revenue

Revenue will issue you with a monthly statement based on your submissions. This will be by the fifth day of the following month and will show a summary of the total liability.

The statement will show a breakdown of your liability for:

-Income Tax

-Universal Social Charge

-Pay Related Social Insurance

-Local Property Tax.

The statement will be treated as the return if no amendments or corrections are made before the return due date.

5.    Returns and payment due dates

When your monthly statement is available, you will have the option to:

-View the statement

-Accept the statement

-If you identify errors, make amendments necessary to your payroll submission.

If you take no action, then the statement will automatically be deemed as your return by the 14th of the following month. Payment due dates for employers remain the same. Quarterly and annual remitters will now have a monthly statement issued by Revenue which becomes their monthly return. Quarterly and annual remitters will now have to file monthly returns, but the payment due date will remain the same. For more detailed information on returns and payment due dates, see Revenue’s website.

6.    Corrections

It will be possible to make a correction to your submission either through your payroll software or through ROS. You should deduct Income Tax, USC, PRSI, and LPT from the actual payment made, when it is made. If an individual has been overpaid or underpaid, the correction should be made in the next payroll event(s). For more detail on how to handle corrections please see here.

Make sure that you are prepared for PAYE Modernisation familiarising yourself with the six changes that will come into effect on the 1st January 2019 outlined above. The information contained in this blog post is taken from Revenue’s website. For more detailed information on how to prepare for PAYE modernisation, please see Revenue’s website. Payroll can be complicated, particularly when the rules and regulations around it are changing so rapidly. You can make it easier by using Intelligo’s robust and flexible software solution, Megapay.