What your employees need to know about PAYE Modernisation before January

Revenue’s decision to enhance the ‘myAccount’ portal is areal game changer for the payroll sector in Ireland. Revenue certainly did its research in preparation for PAYE Modernisation, looking at what counterparts in the UK, Australia and Scandinavia are doing, but this innovation is taking things to the next level.

It will effectively allow all employees across Ireland to view their statutory statements (payslips) via a government web portal. From their individual accounts, they will be able to review their tax liabilities and manage their allowances where applicable.

This has some fundamental implications, not least because alot of the printed forms such as P45s, P46s, P60s and P35s will fall by the wayside and become a thing of the past – reducing the administrative burden on payroll departments.  

For employees, however, the biggest notable change will be the new portal. This could well make it feel as if they are now getting two separate payslips – one from their employer and one online from Revenue. This has the potential to create a new headache for payroll staff – at least in the short term.

It’s almost guaranteed that any discrepancies between the two statements will be picked up on and raised with payroll staff. These could lead to a big increase in employee queries. So, we need to be prepared for this and run an education programme with employees.

Do the figures match?

It’s very likely that the two statements won’t look the same with figures being in different places, and this could cause some confusion. So,explaining to employees what they are likely to see could pre-empt many potential misunderstandings.

We can also take steps to show workers what figures will be included– gross taxable pay, tax deductions, PRSI, USC and LPT – where they can locate them on each statement and which should match up. It should then be clearer if any of the information is conflicting or not.

What if employees spot discrepancies?

We also have an opportunity to advise employees how to handle any discrepancy they encounter. This may prevent employees from automatically contacting their employer’s payroll department if there is an issue.

It may be that the problem lies with Revenue or the ‘myAccount’ portal and has nothing to do with the employer or payroll department. After all, the portal’s enhanced view is an innovative new approach being taken by Revenue and, as much as we hope that everything goes smoothly, it wouldn’t be unusual for a deployment on this scale to experience a couple of teething problems.

Making the most of the new system

Where an education programme could have a real benefit for employees is in helping them understand how they can use the portal to make financial gains. With ‘myAccount’, individuals can check their tax cert details and manage their liabilities and allowances more efficiently.

If an employee happens to have two different contracts of employment they could split credits across their different income streams. This is a good news story for many employees as you will be able to advise them on how to minimise taxation and protect their disposable income.  

Of course, if we are going to empower workers in this way we’ll need to ensure that all of their data is kept fully up-to-date so that they have the option to manage their tax in real-time. This will require some employee data cleansing to make sure all information is accurate before the New Year. But if we can do this and provide the right information to workers, we’ll have less queries to handle and be able to help our employees make the most of the new system.