Under the Irish PAYE system, every employer needs to deduct Income Tax (IT), Pay Related Social Insurance (PRSI), Universal Social Charge (USC) and Local Property Tax (LPT) from an employee's’ gross pay. The PAYE Modernisation system will introduce significant changes to how and when a business sends and communicates PAYE information to Revenue. It will effectively mean that all employers must calculate and report their employees pay and deductions in real time, each pay period.
The PAYE Modernisation legislation will modify the way employers process their PAYE information and how they submit this information to Revenue. The changes will overhaul and update the current payroll process to improve businesses PAYE reporting obligations with Revenue. For some employers, payroll is still a manual process and using payroll software is perceived as an additional cost and overhead. Where manual processes are used, Revenue does recognise that PAYE Modernisation will increase the administrative burden on employers. They are liaising with relevant organisations, such as payroll providers, to identify opportunities to streamline and automate the reporting processes.
Revenue will abolish the current employer reporting obligations such as P30s, P45s, P46s, P35s and the generation of P60s. It will no longer be possible for employers to submit their P35 payroll file through to Revenue at the end of the tax year. The final year for the P35 return is 2018 (which needs to be submitted by February 2019). Employers must calculate the correct tax deductions for employees as they are being paid and in real time. Through PAYE Modernisation submissions, Revenue will have the most up-to-date information to ensure that each employee is subject to appropriate levels of tax deductions. Employees will benefit as they will not overpay or underpay tax.
Most employers currently use payroll software to manage their payroll. Revenue is working with BrightPay to ensure our software caters for the employer payroll reporting requirements of PAYE Modernisation. PAYE Modernisation compliant payroll software will ensure the correct data payroll files can be produced and directly imported to Revenue. The Revenue Commissioners are strongly recommending businesses and payroll processors to review their current payroll systems to ensure they can cater for the requirements of PAYE Modernisation. Be aware that manually processing PAYE will require additional time and could increase the possibility of human error. Miscalculating the payroll reports for Revenue will result in non-compliance and penalties. Read: PAYE Modernisation checklist to ensure 100% compliance
The Benefits for Employers
PAYE Modernisation will mean that Revenue’s PAYE information held on a business and their employees will be correct and kept up-to-date. For employees, their tax records will be accurate meaning less under or over payments of tax. Revenue confirms that the overall process of streamlining employer reporting with the regular payroll run will bring increased efficiencies for employers. The real time submissions will make the PAYE system more efficient and ultimately reduce the administrative burden for all businesses.
The Benefits for Employees
One of the main objectives of PAYE Modernisation is to ensure that employees pay the correct amount of tax over the tax year. It will ensure employees maximise the use of their entitlements each year. To achieve this, Revenue will issue more frequent tax credit notices where there are unused credits or rate bands for an employee. Revenue will upload the tax credit notices into the payroll software to make it a seamless process.
PAYE Modernisation Compliant Payroll Software
The Revenue Commissioners Office aims to design an employer reporting process that is integrated into the payroll process. One of the key principles to achieving this objective is that the employer reporting process to Revenue is seamlessly aligned with the payroll process. Every business should conduct a full review of their payroll processes and systems. If you use payroll software, make sure your provider is going to be able to cater for the requirements of PAYE Modernisation. Book a demo of PAYE Modernisation with BrightPay
If you are using a manual system, there will be no facility to directly submit your PAYE reports through to Revenue. Where payments are made outside of payroll software, employers will need to manually create the payroll file for each payroll run. They will then be required to login to the Revenue portal and follow the steps to upload the payroll information each pay period.
Revenue have developed an API (Application Programme Interface) which allows payroll software providers to fully integrate with Revenue’s reporting system. An API will allow both the payroll software and Revenue to communicate or ‘talk’ to each other. The payroll integration will automatically create the required report in the payroll software and then import it directly to Revenue in seconds. Integrated payroll software makes PAYE Modernisation much more user-friendly for employers compared to the outdated, more manual processes of the past. Utilising PAYE Modernisation compliant software will save time and avoid any potential penalties. The API integration will lead to a streamlined process and ultimately a reduction in the administrative burden.
BrightPay will be ready for PAYE ModernisationBrightPay Software has been helping businesses with their payroll needs for almost 30 years. Our payroll products help over 120,000 businesses across Ireland and the UK process their payroll.
We are working directly with Revenue to ensure our payroll software is PAYE Modernisation ready. BrightPay will seamlessly automate and prepare the reports required by Revenue. The PAYE reporting files will be submitted using our direct API integration tool reducing the time it takes to comply with PAYE Modernisation. The speed and ease of BrightPay Payroll allows us to produce the Revenue required reports in seconds. Our direct integration with Revenue has been specifically designed to take the headache out of PAYE Modernisation.
We are experienced, as we have already developed this real time technology and API integration for our UK payroll software. The UK introduced similar real time reporting requirements in 2013. Our previous experience allows us to easily develop payroll integration features that seamlessly align with Revenue’s new reporting requirements.
If you are using a manual system, there will be no facility to directly and electronically import PAYE reports through to Revenue. Where payments are made outside the payroll software, employers will need to manually calculate the payroll file each payroll run. Then they will log onto the Revenue portal and follow the steps to upload the information. For these PAYE Modernisation time sensitive tasks, the speed of automated data submission to Revenue offers significant cost savings.Book a PAYE Modernisation demo
The Ultimate Guide to Paye Modernisation for Employers
In this free guide, we discuss how PAYE Modernisation will affect your business and your real time reporting obligations to Revenue.Download now
Free PAYE Modernisation Training Webinars
At BrightPay, we are committed to helping businesses understand how the upcoming PAYE changes will impact them. Our upcoming FREE webinars will give you an overview of how PAYE Modernisation will affect your payroll processing and how to get your business and payroll processes ready. Our PAYE Modernisation webinars are completely free to attend and include a presentation from Sinead Sweeney, the PAYE Modernisation Change Manager at the Revenue Commissioners. See all events here