Revenue are in the process of reforming the current PAYE system. From 1 January 2019 Revenue will be rolling out the new real-time system. Employers, agents and payroll providers will need to review their business processes and practices so they meet the new requirements.
The aim of PAYE modernisation is to:
- Improve the streamlining of current business processes
- Reduce the administrative burden currently experienced by employers to meet their PAYE reporting obligations.
- Ensure Revenue, employers and employees have the most accurate, up to date information relating to pay and statutory payroll deductions
With the new system employees will be able to log into their Revenue account and view information submitted by their employer. Other changes will include payroll software automatically updating changes to P2c files regarding tax credits and cut-off, and automatically uploading data to Revenue. The new system will also see the abolition of P60s, P45s, P30s and P35 forms. Revenue are also reviewing options to deal with the taxation of Illness Benefit which would remove the obligation for an employer to tax it through payroll.
It will be important for employers to ensure payroll is updated every week or month as the file will be automatically uploaded to Revenue, and non-compliance or continues errors will likely result in Revenue intervention.
To prepare for PAYE modernisation, employers should ensure they have registered all of their employees, received an up to date Tax Credit Certificate (P2C) for each employee and check they have the correct PPSN for all employees. Employers are required to submit a list of employees to Revenue through the Revenue Online Service (ROS). Revenue have published a manual to provide guidance on how to complete and submit the employee list.