Payroll insight
Irish PAYE modernisation
Rachel Mapleston, of Business Analyst in MHR’s legislation team, reveals changes to emulate the UK’s RTI
S ucceeding the implementation of real time information (RTI) in the United Kingdom (UK), the Irish Revenue have decided it is time to follow suit. The pay as you earn (PAYE) modernisation programme, initiated in the 2016 budget by the Irish minister of finance, saw the commencement of a public consultation. The objectives of the consultation: a modernised PAYE system that would provide the Irish Revenue (‘the Revenue’), employees and employers with up to date and accurate information. The Revenue are working on a co- design approach to ensure all aspects of PAYE modernisation are considered, with a seamless integration into the payroll process. Along with key stakeholders, UK developers have been included in this process to offer insights into the pre- and post-RTI implementation in the UK. On reflection, UK’s RTI was technically successful. The gateway held up to the large volume of traffic, technical specifications were timely and concise and a pilot project was used to chase out the inevitable gremlins. However, if we think back to the proceeding months after go-live, data submissions were not always interpreted correctly by HM Revenue & Customs (HMRC), particularly for multiple employments. This created a costly administrative burden for both HMRC and employers to rectify. Hindsight is a great thing, and the Irish Revenue has the opportunity to use this to its advantage. The current Irish process is similar to that in the UK, pre-RTI, with some minor disparities. The current annual return process for submitting PAYE data will change to real time. Submissions will be made each pay period via a web service and should be dealt with by your payroll
software. The real-time submissions contain similar data items to that currently submitted annually, with the introduction of an employment ID. This will be employer- generated to distinguish between multiple employments. ...employer- generated to distinguish between multiple employments The existing P2C notifications – UK’s P6 notice equivalent – are downloaded from the Revenue’s online service (ROS) and uploaded into the payroll software. This will be replaced by a Revenue payroll notification (RPN) web service. This differs from the UK as it has a two-way path allowing employers to notify the Revenue of new starters before the employee is paid. A response, with up to date PAYE arrangements, should be returned in time for their first payment. The success of this will depend on the efficiency of the response service from the Revenue, particularly with weekly-paid employees. Another difference between the PAYE modernisation program and RTI is the abolishing of forms P45, P46 and P60. It will be important that the real-time submissions are timely and accurate as employees will rely on accessing this data via their online PAYE account (MyAccount). The annual maintenance of these forms and the administrative cost of distributing them makes this decision a favourable one for some, but there needs to be consideration for those – such as those on pensioner payrolls – who may not want to be ‘online’.
The project has brought to the forefront the disjointed process of calculating and taxing illness benefit (IB), the Irish statutory equivalent to the UK’s statutory sick pay. Claimed from the state, payroll is responsible for taxing the benefit but late notifications and the various rates that are paid have caused employees to be taxed incorrectly. Effective January 2018, IB will be taxed in the same manner as other statutory benefits; the Revenue will amend tax credits and cut off points for employees. The forms P45, P35L and P60 will all need amending for the 2018 tax year to take into account that IB is no longer a reportable item. The push to reach the January 2019 go-live date needs to start now for employers. The Revenue have published guidance on how to prepare, including checks that employers have registered all employees in their employment with the Irish Revenue. Employees who do not have a current P2C in place will require registering. They must also have a personal public service number (PPSN) in place: this is a vital data item in the submission process as it will be used along with the employment ID to match to Revenue records. The quality and accuracy of data are paramount in a real-time situation and can be the deciding factor for success. Further information on how to prepare, and what is changing, can be found on www.Revenue.ie. Could the outcome of PAYE modernisation outshine that of RTI? With the improvement of the flow of employee information between employee and Revenue and the abolishing of antiquated forms, it will be a true real-time process with the most current tax information available to all. n
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| Professional in Payroll, Pensions and Reward |
Issue 35 | November 2017
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