Following on from our earlier blog post titled ‘What You Need to Know about PAYE Modernisation’, this post is about how to prepare for the changes that will come into effect on January 1st, 2019. In order to prepare for PAYE modernisation; employers must complete the following seven steps. 1. Register as an employer 2. Register all of your employees 3. Receive an up to date Tax Credit Certificate (P2C) for each employee 4. Check you have the correct PPSN for all employees 5. Ensure you complete the P45 process correctly 6. Make yourself aware of your obligations at year end 7. Prepare a list of your employees and send it to Revenue. We will now look in more detail at each of these steps, so you can rest assured that you are ready for PAYE modernisation to come on January 1st, 2019.
1. Register as an employer
You must register as an employer if you pay your employee more than:
- €8 per week (or €36 per month), if they are full-time employees
- €2 per week (or €9 per month), if they have other employment(s)
In order to register as an employer, you will need to provide Revenue with your name and address and you must register within nine days from the employee’s starting date. There are slightly different rules if you have a domestic employee, details can be found on Revenue’s website.
2. Register all of your employees
You must register all of your employees with Revenue. The registration procedure differs depending on whether the employee in question has worked in the State before. For employees who have worked in the State before, the registration procedure will differ depending on whether or not they have worked anywhere else that year and if they have a current P45. For more details on registering employees, see here.
3. Receive an up to date Tax Credit Certificate (P2C) for each employee
A P2C is an employer copy of your employee’s Tax Credit Certificate. It shows:
- tax credits and tax and Universal Social Charge (USC) cut-off points
- any previous pay, tax, and USC deducted from 1 January (unless the certificate is on a week 1 or month 1 basis)
- tax and USC exemptions
- the amount of Local Property Tax (LPT)to be deducted (if applicable).
You need to receive an up to date Tax Credit Certificate (P2C) for each employee. For more details on P2Cs see here.
4. Check you have the correct PPSN for all employees
PPSN is a unique reference number that is needed for all dealings with public service agencies, including Revenue. PPSNs are provided by the Department of Employment Affairs and Social Protection (DEASP). You must make sure that you have a record of PPS numbers for all employees.
5. Ensure you complete the P45 process correctly
You must complete a Form P45 when your employee:
For more details on the P45 process, see here.
6. Make yourself aware of your obligations at year-end
At the end of the tax year you must:
- complete and submit your Form P35
- ensure that Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI), Universal Social Charge (USC)and Local Property Tax (LPT) records are set up for each employee for the coming tax year
- deal with ‘week 53’ cases if there is a payday on 31 December (or, in a leap year on 30 or 31 December)
- issue each employee with a Form P60.
For more information on your end of year obligations, see here.
7. Prepare a list of employees
Revenue is asking employers to send a list of employees through Revenue’s Online Service (ROS). This list will ensure that both employers and our records are accurate and up to date.
The list must include:
- employees who are currently in your employment (including directors)
- employees on long-term leave such as maternity leave or sick leave
- pensioners in receipt of payments from you
- seasonal or temporary employees for whom you have not completed a P45
- employees on a career break for whom you have not issued a P45
- employees for whom you have received PAYE Exclusion Order.
There are strict guidelines on how this list is to be formatted and these are available here. The facility to upload the List of Employees will be made available on a phased basis throughout 2018 and employers will be notified as such.
Make sure that you are prepared for PAYE Modernisation by completing the seven steps 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. Revenue are hosting a number of regional seminars about PAYE Modernisation and you can register your interest for these here. 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 managed payroll service; Intellipay.