Since January 1st of this year Ireland now has a new PAYE system in place. Known as PAYE Modernisation, it introduces significant changes to the Irish payroll system since its execution in 1960.
Overall, PAYE Modernisation should benefit employers and employees alike, however, with anything that’s new there will surely be some hiccups along the way.
Under PAYE Modernisation all employers in Ireland must submit their employees payroll data in real time every pay period.
What Will PAYE Modernisation Involve?
The payroll system in Ireland required employers to submit detailed information to Revenue of their employees pay at the end of each year via a P35 format.
With the arrival of PAYE Modernisation employers will now report frequently to Revenue and through online means similar information.
It is obligatory under the Irish PAYE system for an employer to calculate an employees pay and deductions. The deductions taken from the employees pay include:
- Income Tax (IT)
- Pay Related Social Insurance (PRSI)
- Universal Social Charge (USC)
- Local Property Tax (LPT)
PAYE Modernisation eliminates the need for employers to file P30, P45, P46, P60 and P35 returns as this type of information will now be reported in real time.
PAYE Modernisation Benefits
According to Revenue PAYE Modernisation is both beneficial for employers and employees in certain ways. The Irish Government agency has said in terms of employers that the new system will increase business efficiency through the process of streamlining employer reporting. Ultimately, the existence of real time data reporting will reduce the administrative build up at the end of each tax year.
For employees, Revenue have said the overall goal from PAYE Modernisation is to manage the issue of overpayment and underpayment of taxes more effectively, thus allowing employees to maximise the use of their entitlements at the end of each year. Employees will be able to access their most up to date pay and tax records on a regular basis online.
Ensure Your PAYE Details Are Correct
What used to be the role of accountants now falls down to the individual themselves. The new system of PAYE Modernisation means you have to ensure your PAYE details are correct and up to date.
Earlier this month the ACCA (Association of Chartered Accountants) warned that some 120,000 employees receiving their first weekly payment could face the dilemma of 51% in emergency tax due to incorrect details on the new PAYE system.
The Chairman of the ACCA Stephen O’Flaherty said: ‘Under the old system, accountants were able to manage the PAYE system to ensure that all employees got paid. Under the new online system they simply cannot do this.
‘The implementation of emergency tax for employees that do not have the correct records will considerably reduce their disposable income, post-Christmas, when households are already very stretched.
‘The best advice for people in this position is to register on myaccount on the Revenue website, if they have not already done so, and update their records as soon as possible as it is incumbent on them and not their employer to do so. Those people that are paid monthly still have time to make sure their salary is correct by updating myaccount before the end of January.’
Kane Bergin are at hand to help you with the new PAYE Modernisation system and make sure everything is working correctly for you and your business. For further information and advice call us today on (01) 969 6306 or email info@kanebergin.ie.