The Ireland Update Tim Kelsey, MCIPP, AIPA

The Ireland Update
   Tim Kelsey, MCIPP, AIPA

Budget 2019

   Budget highlights:

   • No changes to Tax Credit levels or Income Tax rates
   • SRCOP levels raised
   • USC rates set to 0.5%, 2%, 4.5% - income over €70,044 still subject to 8%
   • Threshold for 4.5% USC liability rises to €19,874.01
   • Minimum wage to increase to €9.80/hour from 1st January
   • No changes to EE rates of PRSI, ER rates rise by 0.1%
   • Electric vehicles (not hybrids) provide no BIK when provided to employees until 2021, subject to maximum OMV of €50,000
   • All state benefits including Illness and maternity benefit increase by €5/week from 25th March 2019.

PAYE Modernisation

   Real Time Electronic Reporting - the driver for change:

   • 2.8 million active PAYE employments and pensions in payment
   • 256,000 employees with more than one live employment
   • 200,000 registered employers
   • But 111,000 employers have less than 5 employees
   • Government has passed the Income Tax (Employments) Regulations 2018 which
    provide full details of how the system will work.

PAYE Modernisation

   Overview of procedure

   • Employers will report to Revenue pay, tax and other deductions and leavers at the time they
     run their payroll

   • Details of employees starting employment will be reported before their first pay day
   • The final payroll run in the year will generate a pre-populated statement showing total tax
     deductions for the year for employer and employee

   • Prior to the start of each year, an online statement setting out the tax credits and standard rate
     cut-off point for the upcoming year will be made available to each employee.

PAYE Modernisation

   The following forms/procedures are abolished from 1st January 2019:

   • P45/P46
   • Monthly P30
   • P35 and P35L returns
   • P60 Certificate
   • The 2018 year End will be the last one completed – this must be done to the usual deadlines.

Revenue Payroll Notifications

   System works on the assumption an RPN will be easily available:

   • Employers will need to report new employees before the first payroll run and
    obtain an RPN for then

   • The most up to date RPN for existing employees must also be retrieved before
    payroll

   • The system offers a number of different options as to how this is actioned
   • No RPN? Then emergency basis of taxation applies.

Payroll Reporting Options

   Three possible options:

   • Direct Payroll Reporting
   • Payroll software communicating seamlessly with Revenue in accordance with the software providers
     operating principles

   • ROS Reporting
   • Uploading files or requests produced by payroll software via ROS
   • No payroll software – payroll calculated by using Revenue Tax Deduction Cards or manually
   • Employer completes online form via ROS to upload pay and deduction details.

Payroll Reporting

   To be submitted on or before the day of payment:

   • Employees personal details
   • Tax credits, SRCOP and USC rates/COP’s used
   • Gross pay
   • Benefits in Kind
   • Employer reference and employment Indicator
   • Tax, USC, PRSI and LPT deducted
   • Pension contributions deducted
   • Full list in handout.

PPS Checker

   Available on ROS

   • Employer can use this online service to check the validity of a PPS number
   • Some employers do this as part of their pre employment checks on the potential hire
   • System allows up to 10 requests per time – provide full name, date of birth, address and
     suggested PPS number

   • System then returns either “Valid” or “Invalid”
   • If Invalid is returned ask the employee to confirm the number on previous Revenue/DEASP
     correspondence.

Payroll Submission

   Submitted on or before the day of payment

   • ROS will allow the employer to view individual employee records
   • There may be warning/error messages reported
   • The most likely is “Warning – out of date RPN used”
   • Employer must submit corrections to data – timing dependent on nature of error
   • Volume of corrections and timing of employer’s submission are fed into Revenue’s risk
     analysis system to determine likely need for compliance intervention.

New Employee

  Payroll calculation requires an RPN to be issued

  • Employer must obtain employee’s PPS number and verify it
  • Direct payroll software may trigger an automatic request for an RPN to be issued
  • ROS payroll software users will either upload a request file or submit an online form
    requesting the RPN

  • Issue is dependent on the individual being registered with the Irish state – taxpayers
    responsibility to arrange

  • No RPN? – use the emergency tax basis.

Month1/Week1 Basis
  Revenue policy not to issue a cumulative RPN where this would
    cause hardship to an employee

  • If the implementation of an amended RPN generates a large
    tax deduction or causes a negative net employer is instructed
    to contact Revenue and a week 1/month 1 RPN will be
    issued
  • Employer guide states that where this happens outside of
    working hours, the employer may unilaterally adopt a week 1/
    month 1 basis and must apply to Revenue on the next
    working day for a revised RPN.

Emergency Basis

   Rules have changed from January 2019

   • Emergency basis applies where the individual does not provide a PPS number
   • Or when the employer requests an RPN the message “No RPN Found” is
    reported

   • Employer should tell the employee to contact Revenue to resolve the issue of an
    RPN as soon as possible.

Emergency Basis

        Weekly Paid Employee
        • First 4 Weeks, Single Persons Allowance
           • Standard Rate Cut-Off Point
        • Thereafter, all income liable to Higher Rate Tax at a flat
          40%
        • Where employee is monthly paid, the first month’s
          salary (even a part month for a mid month starter)
          receives an award of the single persons SRCOP.

Casual Employees

   As and When Contracts

   • Not always clear when a casual employee has left employment
   • New rule for 2019
   • Where a casual employee has not been paid for three straight months the next payroll
     submission should make them a leaver

   • Payroll submission will show nil Pay and deductions for that period
   • The date of leaving should be recorded as the last day the employee worked for the employer.

Monthly Statement

   Replaces the P30 declaration as a legal return

   • With no formal Year End within the new system, employers are required to make a legal
     declaration each month

   • This is actioned via the monthly statement
   • Revenue post the monthly statement showing total tax, USC, PRSI and LPT due
   • Employer has until the 14th to either accept the statement or make corrections to it
   • If the employer does nothing, the statement posted on the 5th becomes a deemed return.

Payments After Leaving

   Payment made in same year as leaving:

   • Employer actions RPN look-up request to receive an RPN for the ceased
     employment

   • Calculate PAYE/USC using these details
   • Sends payroll submission of the payment using original employment ID and
     original cessation date

   • Files the payment date to match the day ex-employee is paid.

Payments After Leaving

   Payment made in subsequent year to cessation

   • Employer actions a “Create RPN” request and does not supply an employment
    commencement date

   • Calculate PAYE/USC using these details
   • Sends payroll submission of the payment using original employment ID and
    original cessation date

   • Files the payment date to match the day ex-employee is paid.

PRSI

  What’s new for 2019

  • No change to classes and sub class regime
  • No change to employee contribution rate – remains 4%
  • Employer contributions rise by 0.1% to 8.7%/10.95% to fund increase in
   National Training Levy

  • Threshold for class AX rises from €376 to €386 per week.

Payroll Submission

   PRSI information to be included on each submission:

   • Pay for EE PRSI contribution
   • Pay for ER PRSI contribution
   • Whether the EE is exempt from PRSI in Ireland and why
   • PRSI Class and Sub Class
   • Number of insurable weeks included in submission
   • EE PRSI contribution
   • ER PRSI contribution.

Monthly Remittance to Revenue

   Payments to Revenue of collected PAYE, PRSI,USCLPT should be made each month

   • Revenue issues statement on 5th – employer has until 14th to accept or amend
   • Once the 14th is reached the statement become a legal return and is the due amount Revenue seek
     to collect

   • Where total payments due are less than €28,800 pa and the employer has been registered for at
     least 12 months, the employer can opt for quarterly or annual payment payment

   • Payment must be remitted to the Collector – General by 14th of following month
   • Or by 23rd of following if paying and filing electronically.

Paying Revenue

   Options

   • ROS Debit Instruction (RDI) – customer determines amount and date to be paid by completing an RDI
     mandate form via ROS

   • Credit/Debit card via ROS or by phone – no charges for credit card payments
   • Fixed monthly Direct Debit instruction – must cover at least 90% of the employers overall monthly liability
     and can be amended when the payments will not meet the full annual liability.

   • Variable Direct Debit to collect the balance due for the current month – taken on third last working day of
     month followed by a second attempt 7 working days later

   • Interest charge on late payments – 0.0274% per day.

Local Property Tax

   Issues to watch out for

   • RPN Issued with annual LPT amount to be deducted – employer actions
   • A subsequent RPN is issued with a smaller annual LPT amount but deductions to date already
     exceed the new amended balance – cease deductions but make no refunds

   • An RPN is issued with LPT value of 0.00
   • Cease deductions but make no refunds
   • Employee on nil pay who receives a tax/USC refund who also has LPT on RPN – take LPT
     deduction from tax/USC refund.

Local Property Tax

   Priority of deductions

   • LPT is deducted after PAYE, USC, PRSI and allowable pension contributions
   • LPT is deducted before all non statutory deductions
   • Where a Court Order is in place when an RPN containing LPT is issued, the
    Court Order takes precedence

   • Where an RPN including LPT is in place when a Court Order is issued, the LPT
    takes precedence over the Court Order.

Recovering Salary Overpayments

   New guidance from Revenue

   • An overpayment recovered in the same year can be actioned by an adjustment to gross pay (thus
     correcting the tax/USC/PRSI)

   • This now includes leavers who may repay the net sum due and the employer will adjust the payroll
     submission accordingly

   • An overpayment relating to a previous financial year must be recovered from net pay as the total gross
     amount due

   • Once repaid the employee may then apply to Revenue for a refund of tax/USC/PRSI – note 4 year limit
     for claims.

Sectoral Employment Order

   Mechanical Engineering Building Services Contracting Sector

   • Effective from 6th March 2018
   • Mandates minimum rates of pay for classified workers in excess of Minimum Wage legislation (€22.73/hr)
   • Fixes working week at 39 hours and mandates premiums for overtime
   • Requires a compulsory pension contribution of a minimum €8.84 per day (€3.52 EE/ €5.32ER) to be paid
   • Requires a death in service contribution of €2.22 per day split between EE & ER
   • Mandates a PHI scheme contribution of €0.63 EE/€1.27 per day
   • See https://www.workplacerelations.ie/en/news-
     media/Workplace_Relations_Notices/New_Sectoral_Employment_Order.html?utm_source=Newsletter+No.3+%282018%29&ut
     m_campaign=Newsletter3%2F2018&utm_medium=email .

Thank you for attending

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