TIPS TO GET READY FOR THE CHANGES IN HOW PAYROLL/PAYE SYSTEMS INTERACT WITH REVENUE – PART 1

The way that payroll systems interact with Revenue is due to change in January 2019.  All businesses will be affected by the changes and SMEs may need some assistance to upgrade their systems to comply with the new way of reporting payroll information.  We will get you started with some information on how Sage payroll will change.

WHY ARE THE CHANGES NECESSARY?

The Revenue Commissioner’s Niall Cody said recently that the modernising of the system “represents an important step in the process of continuous improvement in service, compliance and efficiency in our administration of the tax system”.

The existing PAYE system was introduced in 1960, when life and work were very different from what they are today.  In 1960, a job was for life and working hours were structured around a nine to five working day with most employees working away from their home.  In 2018, the availability of the internet and the recognition by employers of the need for work-life balance, means that companies are offering more flexible working days and hours.

Perhaps it is time for a change in the administration of the tax system also!

WHAT WILL CHANGE EXACTLY

1. From January 2019, employers will have to submit payroll data on a regular basis. This is a fundamental shift from the current system whereby payroll data is submitted once per year on a P35 form.

2. Employee data will all be submitted electronically in real time in the new system – commencing employment, regular deductions (PAYE/PRSI/USC) as well as cessation of employment.

3. The forms we are familiar with – the P35, P60, P45 etc will cease to exist.

CHANGES IN SAGE SOFTWARE

The following is a practical summary of changes in Sage Version 21.1:  Sage Payroll (Micropay) Users

STEPS

One of the first steps in preparing for Payroll modernisation which comes into effect on 1^st January 2019 is to upgrade to Sage Payroll (Micropay) version 21.1.

Version 21.1 provides some new important options

1. If you are requested by Revenue to provide a list of employees Version 21.1 has the option to do this. This can then be uploaded to Revenue through ROS.
2. Record tax agent details
3. Employment ID – Together with the employee PPS number and employers Reg number it will be used to identify employees (default value of 1).
4. Flag Employee PAYE exclusion orders
5. Flag proprietary and non-proprietary directors
6. Flag employee as PRSI exempt
7. Validate Payroll Data

Where to find these options in Sage Payroll (Micropay) Version 21.1

Employee list for Revenue:                Reports – Payroll Reports – Company – File Exports – Employee List to ROS

Record tax agent details:                    Company/Payroll – Tax agent details

Record employee employment ID:   Employee details – all tabs

Record exclusion orders for PAYE:    Employee details – Tax/USC tab – Exemptions & Exclusions

Record directors and director type: Employee details – Personnel tab – Director

Mark employee as PRSI exempt:      Employee details – Tax/USC tab – Exemptions & Exclusions

Validate Payroll Data:                         Reports – Validate Payroll Data