PAYE Modernisation is set to change the face of payroll forever, here’s what you need to know:
With all the demands running a business brings, PAYE modernisation probably isn’t at the top of your to-do list, but there are steps you should take now to ensure a smooth transition to Real-Time reporting effective from 1st January 2019.
PAYE Modernisation will see annual submissions relating to an employee’s pay and deductions change to whenever an employee is paid (the deadline will either be on or before payday).
Revenue data alignment
It is important to ensure your records correspond with Revenue’s to facilitate the accurate notification of PAYE data via the Revenue Payroll Notification (RPN), the replacement for the P2C. Currently, Revenue receive P35s with a large proportion of unregistered employees which has resulted in inaccurate PAYE deductions.
Alignment is made a lot easier through Revenue’s Employee List upload facility, which is basically a list containing both personal and PAYE data for all employees and pensioners. Revenue will be requesting this in phases from employers and it will be a one-off process.
Before collating the data for the list, there are a few things you need to check:
- Employees and pensioners must have a Personal Public Service Number (PPSN) in place.
- Leavers should have been updated on Revenue Online Services (ROS) using the P45 process.
- New starters should have been updated on ROS using either the P45 part 3 or P46 process.
It is important to note that once alignment has taken place, the P45 and P46 process should be followed for all new employees or leavers to maintain accuracy between employer’s records and that of Revenue’s.
New reportable data
The great news is that there’s little change to reportable data from the current P35 to the new Payroll Submission process. Although new items don’t need to be reported until January, you should still consider doing the work now to avoid stress at the end of this year. The new data items to report are:
- PRSI exemption reason – The reason the exemption is in place.
- Director – Identifies Proprietary Directors.
- Employment ID – Uniquely identifies each employment an employee has with an employer.
- Gross pay – This is required for the employee end of year statement.
Your company software might have the facility to populate some of these items for you, so speaking to your provider is key to getting a good understanding of which items you will need to take ownership of.
ROS permissions occur at employer registration level. If you’ve got several different payrolls under one registration at the moment, you’ll soon be able to view all employee submission data for this registration. Revenue is urging employers to request a new employer registration to segregate employees for confidentiality purposes e.g. Executive Payrolls. This is crucial for protecting your staff data and a step you should definitely take.
Year-end process review
A lot of employers rely on year-end as a time to work out their costs and adjust any in-year estimated emoluments.
This system has worked well for a lot of businesses, but now is a good time to review it and any related processes, so they are specifically designed to work alongside real-time reporting. There are numerous examples of this, like estimated benefits in kind, which should reflect benefits received each pay period and not adjusted at year end.
What to do now.
There is still a lot of time until PAYE Modernisation, but planning ahead and starting your journey well before deadline day reduces the last minute panic and allows for any setbacks.
While a lot of the changes are based around rethinking your systems of work around payroll, this could be the ideal time to update your software systems and create an in-depth plan for your business. Prepare for the future and make sure the changes create a ripple in your business, and not a wave.
Worried about not being compliant with the new regulations? Chat with our team to discuss how we can help you not only be compliant with PAYE Modernisation, but also improve many of your payroll processes, whether you want to host your own or outsource payroll to us. We've also created a handy guide on all things PAYE modernisation - you can grab your free copy via the link below:
PAYE Modernisation Guide