PAYE Modernisation, or real time reporting, comes into effect on 1st January 2019, as a method:
- To ensure Revenue, Employers and Employees are always working with the most up-to-date and accurate information.
- To ensure Employers record and process payroll taxes and charges correctly and on time.
- To allow employees manage how their allowances and credits are assigned. This is particularly important for couples or those with multiple employments across the year.
The PAYE Modernisation Project will involve the most significant reform of the PAYE system since its introduction in 1960. Employers will need to calculate and report their employees’ pay and deductions as they are being paid.
PAYE Modernisation opens a new two-way method of communication with Revenue regarding an employee’s tax details. By operating in real time, Revenue will ensure that the correct tax details are being used at the time of payroll payments to the employee. This will make it easier to deduct and pay at the right time the correct amounts of:
- Income Tax
- Pay Related Social Insurance
- Universal Social Charge
- Local Property Tax
- Revenue Payroll Notification (RPN) – this is the new name for the current tax credit certificate. Employers are required to use the most recent RPN details available when processing the payroll.
- After processing each payroll, a Payroll Run Submission (PRS) must be sent to Revenue on or before the date the employee receives a payment.
- All current “P” forms – P2c, P30, P35, P45 and P60 will be replaced by this continuous exchange of data between payroll systems and Revenue.
- Employees are advised to register on myAccount with Revenue now, to ensure accurate RPN details are available to the employer.
Revenue, employers and employees will have the most accurate, up to date information relating to pay and statutory payroll. This will ensure the correct amounts of Income Tax, Pay Related Social Insurance, Universal Social Charge and Local Property Tax are:
- Deducted at the right time
- Paid by employers in the correct amount of deductions for every employee.
This will improve the accuracy, ease of understanding and transparency of the PAYE system for all stakeholders.
What Are The Benefits?
For an employer:
- Seamless integration into payroll.
- Minimise employer cost to comply.
- Abolition of P30s, P45s, P60s and end of year returns.
- Right tax paid on current due dates.
- Time savings.
For an employee:
- Simplified online services.
- Maximise use of entitlements.
- Automatic end of year review.
- Real time accurate data.
- Statutory in-year return.
- Making compliance easier.
- Accurate up to date income details.
- Reduced customer contacts.
- Timely targeted interventions.
There will be a number of changes to P45 and P60 forms from January 2019.
- You will no longer receive a P45 when your employment ends. Instead, your employer will enter your leaving date when submitting details of your final pay and deductions to Revenue.
- Note: The Department of Employment Affairs and Social Protection will no longer require a P45 for claims.
- You will no longer get a P60 from your employer at the end of the year. Instead, you will get an end of year statement from Revenue. You can access this statement using Revenue's myAccount service or you can request a paper version by contacting your local tax office.