PAYE Modernisation

Are you ready for PAYE Modernisation?

From January 1st 2019, Revenue has introduced a new PAYE System for employers. It brings changes to how employers gather and report information on payroll to Revenue. All employers need to be aware of how the system works and are all obliged to comply with and operate the new regime from 1st January 2019. 

PAYE Modernisation changes how employers report their payroll information to Revenue. Every time an employee is paid, a file will need to be submitted to Revenue. This file will include all the details of employee payments, deductions and leaver information. The contents will be similar to the current annual P35 but instead will be submitted every pay period. 

Listed below are the steps needed to ensure that employers correctly report their payroll information to Revenue:

  • Each time you pay your employees (and directors), your software should automatically search for Revenue Payroll Notifications(RPNs), which will provide the details required to calculate the correct payroll deductions. RPNs can change frequently depending on your employees' circumstances and you can now access the RPNs with your payroll software or on ROS.
  • The safety net of being able to use the P35 form at the end of the year to correct errors will be gone and you will no longer be able to correct mistakes in this way.
  • You can review Revenue's monthly statement, which summarises your payroll reports and you can make corrections to this report before the 14th of the following month. After that, it becomes a statutory return.
  • In the past Revenue did not see payroll information until you reported it on the P35, now Revenue will see details of employees' pay and tax deductions in real time.
  • This means that the employer must at all times operate the payroll accurately when the employee is being paid to avoid mistakes and possible penalties.

The above processes have replaced P30 reporting, which was only required on a cumulative basis for the company rather than per employee. At the end of every month the employer will receive a statement from Revenue summarising the information they reported. 

This will be available to review on the ROS system on 5th of the following month. The employer can review this monthly statement and make any corrections necessary before 14th of each month. Employers need to review their payroll procedures and ensure that they are meeting these new requirements in order to avoid penalties of €4,000 for each non-compliance under the new system. 

For further information visit the Revenue website here.