What is PAYE Modernisation?

Overview

The PAYE Modernisation Project will involve the most significant reform of the PAYE system since its introduction in 1960. Employers will need to calculate and report their employees’ pay and deductions as they are being paid. This will make it easier to deduct and pay at the right time the correct amounts of:

• Income Tax
• Pay Related Social Insurance
• Universal Social Charge
• Local Property Tax.

The new real time reporting regime will be operational for all employee payments being made from 1 January 2019. Employers, agents and payroll providers will need to review their business processes and practices so they meet the new requirements.

PAYE modernisation will:

• improve the streamlining of current business processes
• reduce the administrative burden currently experienced by employers to meet their PAYE reporting obligations.

SMART PAYE

Revenue, employers and employees will have the most accurate, up to date information relating to pay and statutory payroll. This will ensure the correct amounts of Income Tax, Pay Related Social Insurance, Universal Social Charge and Local Property Tax are:

• deducted at the right time
• deducted from the right employees
• paid by employers in the correct amount of deductions for every employee.

This will improve the accuracy, ease of understanding and transparency of the PAYE system for all stakeholders.

SMART PAYE sets out the key design principles of the project.

By working to these principles throughout the design stages, we can ensure the:

• project meets its objective
• benefits for all stakeholders are easily identifiable.

What are the benefits?

For an employer:

• Seamless integration into payroll.
• Minimise employer cost to comply.
• Abolition of P30s, P45s, P60s and end of year returns.
• Right tax paid on current due dates.
• Time savings.

For an employee:

• Simplified online services.
• Maximise use of entitlements.
• Automatic end of year review.
• Real time accurate data.
• Transparency.

For Revenue:

• Statutory in-year return.
• Making compliance easier.
• Accurate up to date income details.
• Reduced customer contacts.
• Timely targeted interventions.