REAL TIME REPORTING
Before the introduction of the PAYE modernisation, PAYE in Ireland was carried out by submitting a report at the end of the year through a P35 return or P45 when employment ceased, which sometimes led to incorrect charges and payment of taxes. PAYE modernisation is a Real Time Reporting regime that will allow for real time communication between businesses and the revenue about Employees pay and tax deductions. The Employer will be required to submit a submission to the revenue for each employee every pay period.
On the 1st of January, 2019, the Irish Revenue service implemented the most substantial reform of the PAYE system since its initial introduction in the 1960’s. This change has been dubbed ‘PAYE Modernisation’ and has seen significant changes take place in how Employers and Contractors submit taxes. This system gives more control to the contractor over their tax submissions.
ALL FORM P’S ABOLISHED
There will be no need for P35 returns, P45’s or P60 end of year statements, as information will be submitted to the Revenue each month as changes take place and your end of year statement will be available by logging in to your online account. This will benefit Employers and Employees in kind as the Revenue will be able to ensure the correct tax deduction is being made at the right time from the Employee.
WHAT DOES THIS MEAN FOR YOU
As a contractor, the most important fact to take away from the introduction of this system is to know that how you will be paid will not change. So long as timesheets, invoice requests and expenses are submitted on time, you will receive them in your next pay as per usual.
However, the change occurs if you do not submit your timesheets in a timely manner. An element of the PAYE modernisation is that the payroll cannot be amended once submitted to a payroll run. Instead, you will have to wait until the next payroll period to be reimbursed. This is important to make note of.
The benefits of this scheme are numerous but the most notable for a contractor is that you will have more control over your payroll information. This is due to the fact that you will have access to instant and live payroll data. Using this, you will be able to check your entitlements and ensure that you are maximising your utilisation of them.
- Make sure that you have set up a MyAccount.ie and that the information included in this account is correct. The onus is on you to provide the Revenue with the correct information. Using this account, you will be able to see real time information about your taxes.
- If you are an individual that is new to contracting in Ireland, you will need to acquire a PPS number as soon as possible to ensure that you are not temporarily taxed via Emergency Tax as this is subjected to a higher rate.
- Submit your expenses and time sheets on time so that they can be included in the payroll for that week or month.
If you want to learn about some of the other benefits that can be attained by taking contract work, please check out our previous article here. Contract work can be extremely rewarding for some individuals. If you would like to learn more about contract work and how it could benefit you, reach out to our recruiters today on 01 676 0505.