PAYE Modernisation for Employers: Understanding and implementing the new legislation
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The webinar agenda covers PAYE Modernisation, including an overview of the new legislation, how payroll software will handle the changes, and making corrections in real time. There will be a presentation from Revenue on the new rules. Key points include submitting payroll data to Revenue for each pay period through APIs for automated tax credit retrieval and submissions. Corrections can be made but consistent errors could result in penalties. Split payrolls may require separate employer numbers. The new emergency tax rules remove the first tier of credits.
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PAYE Modernisation for Employers: Understanding and implementing the new legislation
- 1. -- The webinar will begin shortlyā¦. PAYE Modernisation: Understanding and implementing the new legislation Hosted by
- 2. The Panelā¦ Paul Byrne Managing Director at Thesaurus Software Former Accountant in Practice Sandra Clarke Partner at BCC Accountants Council Member of the Irish Tax Institute David Hanlon Team lead on the Change Management Team Revenue Commissioners
- 3. An overview of PAYE Modernisation How payroll software will handle PAYE Modernisation Making corrections in real time Processing manually or using payroll software? Split Payrolls New Emergency Rules Webinar Agendaā¦ Part 1: PAYE Modernisation: Understanding and implementing the new legislation Part 2: Revenue Presentation Questions and Answers
- 4. -- Q&A Session Questions tab on your control panel Q&A On Demand This session is being recorded REC
- 5. --An Overview of PAYE Modernisation
- 6. What is PAYE Modernisation? ā¢ Many employees are given the wrong tax credits and cut-off points ā¢ Why? Revenue only gets payroll data at the end of each year (P35) ā¢ Revenue will now know where the employee is working and how much they are earning in real time ā¢ This allows Revenue to allocate the correct credits, avoiding overpayments / underpayments of tax
- 7. What is PAYE Modernisation? ā¢ Employers not operating PAYE correctly ā new employees not registered & out of date tax credits being used ā¢ With PAYE Modernisation, a file will be submitted electronically to Revenue on or before or shortly after each pay run ā¢ Retrieval of tax credits will be automated ā ensuring the correct credits are being used
- 8. The file specificationsā¦ ā¢ RPN ā Revenue Payroll Notification ā used to retrieve tax credits and cut off points for new and existing employees ā¢ http://bit.ly/2Bb1UEp ā¢ PSR ā Payroll Submission Request (Mini P35) ā used to submit payroll data to Revenue each pay period ā¢ http://bit.ly/2FN5xUA
- 9. ā¢ Instead of a yearly P35, there will be a āmini P35ā submitted with each payroll run ā¢ Checking for updated tax credits and cut off points will also be an integral part of each payroll run ā¢ Details of employees starting and employees leaving will be included in the āmini P35ā What direct effect will this have on employers?
- 10. APIs and how they helpā¦ ā¢ API: Application Programming Interface ā¢ Enables different software applications to communicate with each other, resulting in time savings and a better user experience ā¢ Current system of retrieving tax credits (P2Cs) ā manual process with a number of steps
- 11. APIs and how they helpā¦ ā¢ With the API, tax credit retrieval will require just one click ā¢ Periodic payroll submissions (Mini P35) will also be a one click process ā¢ Overall, the actual workload required each pay period should be reduced
- 12. APIs and how they helpā¦ Enter details of new employees in to the payroll Retrieve latest tax credit information ā API Enter pay, hours and deductions for all employees Process and finalise payroll Submit file to Revenue ā API Distribute payslips and pay employees
- 13. Digital Certificates ā¢ APIs will use the digital cert installed on the PC ā¢ If the user can log into ROS, the digital cert is already installed ā¢ Was ROS previously accessed from a different computer? ā¢ Do you want the payroll operator to have full visibility which they will if the cert is present? ā¢ Do you need to consider multiple PREMs?
- 14. No more āPā forms ā¢ P60s ā¢ P45s and P46s ā¢ P35s ā¢ P30s
- 15. Awareness & Preparedness Levels No 7% Yes 93% Employer Awareness Extremely prepared 2% Very prepared 11% Somewhat prepared 55% Not at all prepared 32% Employer Preparedness
- 16. How Payroll Software will handle PAYE Modernisation?
- 17. -Corrections
- 18. Submission Deadlines and Corrections ā¢ In Ireland, the Finance Act specified that the periodic data submission will be required on or before the actual pay date ā¢ Best practice ā submit after finalising each payroll
- 19. Submission Deadlines and Corrections ā¢ Corrections can be made for incorrect submissions ā¢ If the correction means that more tax is payable for a previous tax month, Revenue can apply interest ā¢ A correction after the monthās close off or sign off date will be seen as a change to a statutory declaration ā¢ Consistent corrections or late submissions may result in corrective action by Revenue
- 20. Submission Deadlines and Corrections ā¢ Corrections are dealt with on the basis of āfollow the moneyā ā¢ If an employee is over or underpaid in a period and their pay is adjusted in the next period to correct this, no correction submission is required ā¢ If an employee is paid an amount different to what it says in the payroll, then a correction submission will subsequently be required
- 21. Are you ready for āon or beforeā processing? ā¢ This will be a challenge for some businesses (e.g. hospitality, construction) where historically payments may have been made on a net to gross basis
- 22. - Processing Manually or using Payroll Software?
- 23. Manual payroll processingā¦ 208,000 Irish Employers 50,000 Calculate manually ā¢ Need to log in to ROS and enter all details for all employees ā¢ Need to manually check for and process changes to tax credits/cut offs ā¢ Quite time consuming & prone to error ā¢ Payroll bureau or payroll software?
- 24. Why you need to get things right! ā¢ Employees will expect to see most recent payments in their MyAccount ā¢ Late submissions will lead to the risk of penalties and fines ā¢ A constant pattern of correction submissions will give rise to interest and/or penalties ā¢ Revenue will know when RPN checking and processing is not happening
- 25. -Split Payrolls e.g. executive payroll
- 26. Split payrolls ā¢ Some employers operate two payrolls for the one company, e.g. Directors and other staff ā¢ The digital cert will have access to all of the PAYE information in ROS for that PREM ā¢ Therefore, to enable complete separation, a new employer number/cert should be applied for ā¢ An employer can have as many PREMs as it wants
- 27. Split payrolls ā¢ If different branches are operated on two or more separate payrolls but they all have the same employer number: ā¢ It is advisable to register separate employer numbers for each branch ā¢ This will avoid issues with the new Employment ID field ā¢ Guidance on how to apply for new PREMs/Certs
- 29. New Emergency Rules ā¢ 2019 sees the removal of the 1st tier of emergency tax credits ā¢ 1st 4 weeks will be taxed at standard rate up to emergency cut off point and high rate above the cut off point. No tax credits. ā¢ Thereafter, all pay will be taxed at the high rate. ā¢ If no PPSN, all pay taxed at high rate from the start ā¢ Emergency USC is 8% on all earnings
- 30. New Emergency Rules ā¢ Applies where an employer makes payments of emoluments to or on behalf of an employee in respect of whom an RPN has not been received ā¢ Where an employee furnishes the employer with a PPSN, the employer shall take all reasonable measures to establish that the number furnished is in fact the PPSN of that employee ā¢ New menu item in ROS under Employer Services - āPPS Number Checkerā ā to facilitate this
- 31. New Emergency Rules ā¢ This will greatly incentivise employees who have no record with Revenue to become registered, e.g. students, non-nationals ā¢ Jobs and Pension Service is first port of call for any prospective employee without a record ā¢ Submission of List of Employees should ensure that all existing employees will be included in the first RPNs retrieved in 2019
- 32. --
- 49. - David Hanlon Team lead on the Change Management team for the PAYE Modernisation Project at Revenue Commissioners
- 50. --
- 51. -- Sign up to our mailing list!
- 52. - 20th November @ 11.00 am PAYE Modernisation: Key Facts you must know to ensure 100% compliance 7th November @ 11.00 am PAYE Modernisation: 2 Months to Deadline
Editor's Notes
- PAYE MODERNISATION Good morning everyone. Weāve just completed a sound check with a few people who logged on early. So letās get started.
- We have designed todayās webinar to give you an understanding of how PAYE Modernisation will affect your business and what impact it will have on the running of your payroll. PAYE modernisation will involve the most significant reform of the PAYE system since its introduction in 1960. Employers will need to calculate and report their employeesā pay and deductions as they are being paid. This will make it easier for Revenue, employers and employees to ensure that the right tax is deducted and paid at the right time. We have three speakers presenting today's webinar. First up we have our main speaker, Paul Byrne who is the managing director at Thesaurus & BrightPay. After qualifying as a chartered accountant, Paul went on to set up and manage his own accountancy practice. Paul co-founded Thesaurus Software in 1991 with the goal of providing payroll software to Irish businesses. Thesaurus Software now provides quality software products and excellent customer service to over 100,000 businesses across the UK and Ireland. Next up, Iām delighted to welcome Sandra Clarke who is a Partner at BCC Accountants and a Council Member of the Irish Tax Institute. Sandra is on the front line when it comes to helping her clients through the new PAYE Modernisation changes. Sandra will join us for our panel discussion. Welcome Sandra. We are delighted to welcome our next guest speaker, David Hanlon who is a team lead on the Change Management team for the PAYE modernisation project.Ā David is very much on the front line when it comes PAYE Modernisation and will also deliver a presentation today from Revenues perspective. Welcome David. For our Q&A session we will have Paul, Sandra & David. We will also be joined by Audrey Mooney and Victoria from the support team here at Thesaurus Software. Welcome Audrey and Vicky.
- So first up is Paul who will discuss PAYE Modernisation: Understanding and implementing the new legislation Next, we will pass over to David for the Revenue presentation. Finally at the end we will have the questions and answers.
- Throughout the webinar please type in any questions you may have into the question tab on your control panel and we will try to get through as many questions as possible ā just bear in mind there are a lot of attendees logged on today so we may not get to all questions. Finally, todayās session is being recorded. We will email everyone with a link to the recording and a copy of the presentation slides later today. There is also a survey that will appear when you leave todayās webinar and so we would be grateful if you could fill it out to give us some feedback.
- What is PAYE Modernisation Ā PAYE Modernisation or Real Time Reporting is probably the biggest overhaul of the PAYE system since PAYE was introduced back in 1960.
- Currently, lots of employees are being given the wrong tax credits and cut off points and this is because Revenue only gets payroll data once a year, in the P35. Ā Receiving the data in real time will ensure that Revenue can allocate the correct credits, thereby avoiding over and underpayments of tax. Revenue will know where the taxpayer is working and how much they are earning.
- Many employers are not operating PAYE correctly in that they donāt register new employees or they use out of date tax credits. This is also addressed by PAYE modernisation. Essentially, a file, letās call it a mini P35, will be submitted electronically to Revenue on or before each pay run. In most cases, this means a file is submitted either weekly or monthly. Ā Also, the retrieval of tax credits will be automated, which should ensure that the correct credits are being applied by employers.
- With PAYE Modernisation, the new files are called a Revenue Payroll Notification, or RPN for short, which is used to retrieve tax credits and cut off points for new and existing employees. This replaces the existing P2C files. Then there is the Payroll Submission Request, known as the PSR, which will be used to submit payroll data to Revenue each pay period. This we might also refer to as the mini P35. The full file specifications are included in the links on screen, and we also have included them in the handout section on your control panel if you wish to download them.Ā Ā
- Instead of a yearly P35, there will be a āmini P35ā submitted with each payroll run Checking for updated tax credits and cut off points will also be an integral part of each payroll run Details of employees starting and employees leaving will be included in the āmini P35ā
- Time saving benefits will result from APIs in the payroll software API stands for Application Programming Interface, and this enables different software applications to communicate with each other. In our case, it allows our payroll software to directly interact with Revenueās systems. So, instead of the very manual routines of downloading or uploading, selecting file locations, logging in screens etc. there would be just one Submit button to replace all of this. Ā For example, look at how tax credits (P2Cs) are retrieved at present. You log in to your ROS account. You go to the Revenue record tab. You then select P2C details. You then search the relevant tax year. Then you export, which involves choosing where to save to. Then in your payroll software you go to the relevant P2C import section. You need to select the correct file from the correct location and then import. By my count there are at least 9 steps. Ā
- With the API, it will be one click to achieve all of the above. Ā Similarly with the periodic payroll submission, or our mini P35, the actual transfer of this data to Revenue will also be a one click process. Ā Because of the APIs for P2C retrievals and file submissions, the actual work required each pay period should be less than at present. So, the main message here is that if you are normal by the book employer who pays your staff using payroll software, the new system in 2019 should bring you time savings and a much more fluid experience each pay period. It is probably Revenue who face the biggest challenge of all in making sure their systems work the way they should from the start. With any big bang approach, there are risks that things may not go smoothly. I know myself, from working alongside Revenue on this project, that they are doing everything they can to ensure that the new system will work out of the box. So, we all hope that Murphyās Law keeps at bay!
- Letās look at a typical pay period and the sequence of events and where APIs come in to play: Ā Enter details of new employees in to the payroll Retrieve latest tax credit information ā one click process Enter pay, hours and deductions for all employees Process and finalise the payroll Submit file to Revenue ā one click process Distribute payslips and pay employees Ā We are hoping that the responses to the API requests will be answered in seconds by Revenueās systems. This is something we feel is important to the user experience. In the UK, where they have a similar system, the response is usually answered within 10 seconds.
- It should be noted that the APIs will use the employerās or agentās digital certificate and this cert will need to have been installed on the computer. If the user can log into ROS on the computer then it has the cert installed. You may want to review your setup in advance of 1st January. You will need to ensure that you have a cert installed on the computer that you use to process payroll. If the cert is on another machine, there are instructions within the ROS screens on how to backup the cert and copy to a different computer. If the payroll is split between say directors and other staff and these are done on different machines at present, this will be a problem under the new system as the employer cert will have more or less full visibility of the overall payroll. This is where you would need to look at having more than one employer registered number and therefore more than one cert so that you can keep the payroll truly separate. An employer can have as many registered numbers as they want.
- One of the benefits of the new system is that there will be no more P forms. At the end of a tax year, the individual taxpayer will be able to view and print their official certificate of earnings and deductions directly from their portal. This means that P60s should no longer be required. Ā The files being submitted each pay run will have details of employees commencing and employees leaving. This will mean that P45s and P46s are no longer required to be completed by the employer. Ā As Revenue will be receiving file submissions each pay period, the annual P35 will no longer be required. In addition, this periodic file will eliminate the need for P30s. You will still need to submit a P35 this coming January or February and still need to give your employees their P60s but this will be the last time.
- As some of you may know, we sent out a customer survey last week, and some of the findings are quite scary. When asked if they were aware of PAYE Modernisation, 7% of employers said that they were not aware of PAYE Modernisation. When asked if they felt prepared for the introduction of PAYE Modernisation, just 2% of employers said that they felt extremely prepared, while a massive 32% said that they felt not at all prepared. The majority of respondents said that they felt somewhat prepared.
- One of the main considerations in TPM 2019 has been to keep it looking the same even if under the hood there have been huge changes Digital cert ā a one time thing Caveat ā using a test Revenue system with software that is still in testing Show RPN retrieval Process one change Payroll preview Update Submit PSR Print/Email/Pay Corrections ā now able to handle individual corrections without having to reverse the whole payroll Also mention ability to compare liabilities between system and Revenue and how to query pay runs
- In the UK, the periodic data submission (or FPS) must be submitted on or before the actual pay day. In Ireland, it will be the same. In my view, it will probably be easier to just submit after finalising each payroll, in much the same way as in the demo we just showed you. At least you will know that the payroll is done and dusted when you close out of it. Ā
- If a submission is incorrect, a correction submission can be made by the software. If the correction means that more tax is payable for a previous tax month, Revenue may apply interest. Also, a correction after the monthās close off or sign off date, say after the 23rd of the following month, will be seen as a change to a statutory declaration. Ā If there is constant pattern of corrections for particular clients or if there is a pattern of late submissions for particular clients, Revenue may take corrective action such as site visits or audits.
- Corrections are dealt with on the basis of āfollow the moneyā If an employee is over or underpaid in a period and their pay is adjusted in the next period to correct this, no correction submission is required. The payroll is reflecting what was actually paid. If an employee is paid an amount different to what it says in the payroll, then a correction submission will subsequently be required.
- Revenue estimates that, of the total 208,000 Irish employers, up to 50,000 employers still calculate their payroll manually or have no liability. Ā These employers will still be able to calculate payroll manually. However, in each pay period, be it weekly or monthly, they will need to log in to ROS and enter all of the required details for all of their employees, a bit like manually completing a P35 each pay period. This facility in ROS will only be available for employers with 5 or less employees. Ā Also, before processing the payroll in any week, they will need to religiously log in to ROS to get details of tax credits and cut off points. This, again, will be a very manual process and prone to error. For these employers, for their sanity alone, never mind the huge time savings, it should become apparent that they should either be using the services of a payroll bureau or that they should be using payroll software. Obviously, our hope is that payroll software will be the winner. To quantify it somewhat, doing it manually could take 2 or 3 hours a week. The payroll software costs less than ā¬3 per week.
- A brief summary of why you need to get things right ā¦ Employees logging into their MyAccount will expect to see their most recent payments and for these details to be correct Late periodic submissions will potentially give rise to interest and/or penalties, plus the employer will come within Revenueās risk analysis profiles A constant pattern of correction submissions will potentially give rise to interest and/or penalties, plus the employer will come within Revenueās risk analysis profiles Because the reference number of the latest RPN is included in the PSR, Revenue will automatically know when RPN checking and processing is not happening
- Some employers operate 2 payrolls for the one company e.g. Directors may be dealt with on a separate payroll The digital cert that applies to an employer registered number will have access to all of the PAYE information in ROS Therefore to enable complete separation of access, a new employer number should be applied for with its own digital cert. An employer can have as many PREMs as it wants
- If different branches are operated on 2 or more separate payrolls But they all have the same PREM Advisable to register separate PREMs for each branch This will avoid issues with the new Employment ID field - more on this ID field Guidance on how to apply for new PREMs/Certs will be posted to our website shortly
- While weāre getting set up for Davidās presentation Iām going to show you a quick look at Thesaurus Connect.
- Thesaurus Connect works alongside the payroll software - Payroll information is stored in the cloud and can be accessed online, but the payroll itself must be processed on the existing Thesaurus desktop application. (Click)
- The online functionality allows online access anywhere, anytime for accountants, employers and their employees. (Click)
- Secure online Backup Thesaurus Connect securely synchronises and backups data to the cloud protecting against ransomware and cyber attacks. A chronological history of backups will be maintained which can be restored at any time. (Click Launch)
- Employers can login online to their our dashboard at any time to see up-to-date payroll information where you can see notifications, employer details, Revenue amounts and any upcoming calendar events. Employers can also invite their accountant to access the payroll information. The online employer portal allows access toā¦ (Click employees)
- All employee Payslips, ā¦ (Click reports)
- Payroll reports ā¦ (Click calendar)
- A full overview of all employee leave ā¦ (Click Revenue)
- amounts due to Revenue andā¦ (Click documents)
- Employers can also upload employee documents, such as employee contracts or staff handbooks. (Click X to close)
- Employee Self-Service Portal Looking at the employee self service portal, employees can access their personal self-service online portal which is password protectedā¦ (Click view payslip)
- Here they can view and download current and historic payslips, P60ās and P45ās. (Click first payslip)
- Payslips are automatically added to the employeesā self-service portal each pay period, which eliminates the need to print or email payslips. An email is also automatically sent to employees notifying them that their payslip is available, or if they are using the smartphone app, they will get a notification on their smartphone. (Click documents)
- They can also view HR documents that have been uploaded for them, such as the contract of employment and company handbooks. (Click calendar)
- Employees can view all past and upcoming leave in the Thesaurus Connect employee calendar including sick leave, holiday leave and absence leave.. (Click request leave)
- Here the employee can also request leave through the employee self service (Click my details)
- Employees can also view and update their personal information ā such as their postal address. So thatās a very quick overview of Thesaurus Connect. It looks like David is ready to go now for Revenues presentation.
- Iād now like to pass you over to David Hanlon for the Revenue presentation. Thank you David.
- So we have a one minute sales pitch while we have your undivided attention. In today's webinar we used Thesaurus Payroll Manager to give you an insight into how PAYE Modernisation will work. Both Thesaurus Payroll Manager and our other payroll package - BrightPay Ireland - will be able to seamlessly handle PAYE Modernisation. We have the experience and expertise, having done it already in the UK. The employer version of BrightPay which handles an unlimited number of employees is only ā¬149 plus VAT. There will be no additional charges for implementing PAYE Modernisation. BrightPay has many useful features to help with the administration of your payroll processing. You can roll back individual employees, you can create custom reports, payroll journal exports are available to Xero, Sage, Quickbooks. Plus we have an optional online backup add-on BrightPay Connect which includes an employee self-service to access payslips and request annual leave and an employer portal to view all employees leave, payslips and payroll reports. BrightPay also can import your previous payroll data from Sage, Collsoft and the Big Red Book so you can hit the ground running knowing that you are using the right software for PAYE Modernisation.
- With the new GDPR legislation, we cannot email you unless you subscribe to our mailing list. Make sure to sign up to hear about more upcoming free events and PAYE Modernisation updates. You can unsubscribe at any time. Our newsletters also includes special offers and discounts throughout the year.
- Here are our next free webinars we have coming up which I have to say are excellent. Iāll leave this slide open while we have our panel discussion and Q&A session.