PAYE Modernisation – Are You Ready? highlights the vital steps for new and existing employers to undertake in advance of January 1, 2019, in order to succeed in the imminent taxation system revolution.
The key idea behind PAYE Modernisation is that all communication between employer and Revenue will happen in real time. This means that Revenue can ensure that the correct tax deduction is being made at the right time for every employee. A similar concept has already successfully been rolled out in the UK, called Real Time Information. Ultimately, employers will need to submit payroll information to Revenue every pay period. This will always ensure that Revenue has accurate information for employees.
Communication is key to ensure a smooth implementation of PAYE Modernisation for all employers. The benefits of planning ahead should not be overlooked. PAYE Modernisation will apply to every employer in Ireland, large and small, therefore, a good plan will be crucial to your success. Having a plan in place means that you can allocate sufficient time and resources to be ready to comply with PAYE Modernisation, for example:
- Payroll processing bureaus will need to devise a plan to ensure that payroll information is received in a timely manner from clients; and
- Employers should ensure they have a plan in place to cater for when the payroll operator is on annual/sick leave, etc.
To effectively overcome the upcoming challenges, employers are being encouraged to focus on the quality and accuracy of the data they provide to Revenue. Employers are also being advised to follow several easy steps to guarantee its overall success when it does come into effect in 2019:
- Register as an employer (for new employers);
- Verify the PPSN provided by employees (eg. check it against a Public Services Card, P45 or other Revenue or Department of Social Protection correspondence) and where the employee does not hold a PPSN, they should contact the Department of Social Protection to apply for one;
- Register all employees with Revenue (ie. P45 or P46 where the employee has no P45). Where the new employee has not worked in Ireland before, the employee must register the employment online using the Jobs and Pension service available in myAccount. The Jobs and Pension service can also be used by employees who are changing from one employment to another. Once the employment has been registered, Revenue will issue a tax credit certificate;
- Issue a P45 when an employee ceases employment and submit it to Revenue;
- Ensure an up-to-date tax credit certificate has been received for each employee. The leaflet outlines the basis of tax, which should be applied on the first payday of a new tax year in the event that an up-to-date tax credit certificate for that year is not received; and
- Ensure a complete PAYE, PRSI and USC record for each employee is held at the end of the tax year.
Thesaurus Software and BrightPay have welcomed the upcoming PAYE changes. Paul Byrne, director of Thesaurus Software Ltd, stated during the Revenue's public consultation process held in December 2016: “Whatever system is adopted, it is important that it represents a step forward for all parties. We are already committed to not charging our customers for the additional development involved. In addition, we are considering making a free version of our software available for micro employers, those with one employee.”