PAYE Modernisation

What is PAYE Modernisation ?

On January 1st 2019, the most significant change to the Irish PAYE system since 1960 will come into effect, known as PAYE Modernisation(PMod). It means that employers will have to calculate and report employees pay and PAYE deductions via a Payroll Submission on or before the payment date. Ultimately it means that all the 'P' documents are consigned to history. P2Cs, P35s, P60s, P30s, P45s and P46s will all be retired. An RPN, Revenue Payroll Notification replaces the P2C.

PAYE Modernisation will allow Revenue, employers and employees to have the most accurate, up to date information relating to pay and tax deductions for employees thereby guaranteeing that the right tax deduction is made at the right time from the right employees and that employers pay over the correct tax deductions and contributions for every employee. This will no doubt result in an improvement in the accuracy, ease of understanding and transparency of the PAYE system for all stakeholders.

Employees will have certainty in the amounts payable to Revenue safe in the knowledge they have not over or underpaid tax. Through real-time reporting by the employer, Revenue will have up to date information to ensure that each employee is subject to the appropriate tax deduction. Payroll Software suppliers have been working with Revenue for quite some time creating functionality that will allow for direct interface to Revenue as part of the normal payroll run, resulting in a significant streamlining of business processes and a reduction in administrative burden and costs. Logging on to ROS and manually uploading files, like the P forms, will be consigned to history. It will all happen automatically as part of the payroll cycle.

How does it affect me ?

Employers will be required to report pay and PAYE deductions in respect of each employee every time they pay, whether that be weekly, fortnightly, monthly etc., rather than annually via a P35. This Payroll Submission will eliminate the need to file P30’s, P35’s, P45’s and P46’s. The final year for the P35 return is 2018 (which needs to be submitted by February 2019).

Payroll teams will need to focus on the quality and accuracy of the data they provide to Revenue on each pay run. They will calculate and deduct tax from employees’ pay and benefits based on the latest Revenue Payroll Notification (‘RPN’). As part of the payroll process, they will request the most up to date RPN before making payment to that employee. Payroll teams will have to notify Revenue on or before the payment date the amount of pay and benefits, date of payment and the taxes deducted (PAYE, USC, PRSI and LPT).

Revenue will issue a monthly statement to the employer. If the details are incorrect the employer must amend or correct the underlying payroll data prior to the 14th and resubmit. On the 14th, that statement becomes the statutory return for the previous month.

What are Intelligo doing ?

Intelligo have been working on this project for two years, directly with Revenue at every stage to ensure Megapay is ready for 1st January 2019.

In a nutshell, Megapay will 'talk' directly to Revenue's systems, removing the need for logging on to ROS and uploading/downloading files. Real time will mean, for instance, that when a new employee starts, you can create ‘RPN’ to register them. When an employee leaves, Revenue will be informed when you make their last payment. Time consuming and manual processes such as enveloping and posting of P45s become redundant. Seamless integration between Megapay and Revenue translates to a frictionless process where the necessary inputs are received and returns submitted automatically as part of the normal Megapay payroll cycle.

In November 2018, Intelligo ran a number of Megapay/PAYE Modernisation Sessions. The sessions provided an overview of the changes and how these changes affect Megapay and the payroll process. These sessions, held in both Dublin and Cork, were well attended by Intelligo clients.

What should I do now ?

Revenue requested a ‘List of Employees’ be sent to them before 31 October 2018.  The purpose of this is so that Revenue have the most up to date list of your current employees before they issue the new RPNs for 2019. You can generate this list in Megapay and submit it via ROS.

PAYE Modernisation Checklist

[  ]   Read information from Revenue on PAYE Modernisation

[  ]   Communicate with your employees - encourage them to register for MyAccount

[  ]   Ensure you have a correct PPS Number for every employee

[  ]   Check that you have issued a P45 for every employee who has left

[  ]   Make sure that you have a Tax Cert for all current employees

[  ]   Make sure that you have submitted your List of Employees to Revenue which was due on 31 Oct 2018