PAYE Modernisation | Real Time Reporting
In October 2016, the Minister for Finance announced that the current Pay As You Earn (PAYE) system would be revamped and modernised. This new system is known as PAYE Modernisation, which allows for PAYE reporting to be submitted to Revenue in real time.
PAYE Modernisation or real time reporting (RTR) will enable Revenue to ensure that employees are receiving their correct tax credits and cut-off points throughout the year. This compares with the current PAYE reporting which is done through P35s on a yearly basis.
PAYE Modernisation will be effective from 1st January 2019.
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The Objective of PAYE Modernisation
PAYE Modernisation will allow for real time communication between employers and Revenue that relates to the pay and tax deductions. By operating in real time, Revenue can ensure that the correct tax deduction is being made at the right time for every employee. A similar concept has already successfully been rolled out in the UK, called Real Time Information or RTI. Ultimately, employers will need to submit payroll information to Revenue every pay period. This will ensure that Revenue have accurate information for employees at all times. This process will be made easier if done through your payroll software. Employees will also have online access to payroll information submitted to Revenue by their employer in real time.
The Advantages of PAYE Modernisation
The introduction of PAYE Modernisation will improve accuracy and transparency of the PAYE system between employers, employees and Revenue. This real time reporting process will also mean that the correct tax is deducted when an employee is paid, reducing the occurrence of an employee overpaying or underpaying tax.
PAYE Modernisation will be fully integrated with payroll software, which will significantly allow employers to simplify the payroll process and reduce the administrative cost for employers. Submitting payroll information in real time will remove the need for employers to create P30, P35, P45, P46 and P60 forms which will further reduce administrative processing.
The Disadvantages of PAYE Modernisation
There will be a significant burden placed on small employers who process their payroll manually. Revenue have stated that they are committed to providing a workable solution for smaller employers who may not use payroll software and employers who have difficulty accessing a broadband connection. However, it is still advised that these employers utilise payroll software that will cater for and simplify the PAYE Modernisation process. These employers will face the additional cost of investing in software that will handle PAYE Modernisation.
Fortunately, there are cost effective solutions, such as Thesaurus Payroll Manager that offer easy to use payroll packages with unlimited employees, free support and will provide PAYE Modernisation functionality. By using payroll software, employers will save time by streamlining their payroll processing and real time reporting. Continuing forward with a manual process could lead to errors and increase the risk of non-compliance. It would also be very time consuming to continue with a manual process.
Thesaurus Payroll Manager will be ready for PAYE Modernisation Thesaurus Payroll Manager is working with Revenue to make sure our payroll can easily cater for the needs of PAYE Modernisation. Our software will streamline real time reporting so that employers can easily comply with PAYE Modernisation.
Our development team have already experienced what it was like to implement real time processing and reporting in the UK. Our understanding and knowledge will guarantee that Thesaurus Payroll Manager will offer a seamless and user-friendly PAYE Modernisation process for our customers.
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