Managing payroll can be a complex and time-consuming task for any business. In Ireland, companies are responsible for submitting payroll data accurately and promptly to meet legal obligations. With the introduction of expense reporting in 2024 and the auto-enrolment pension scheme due to commence in 2025, the administrative burden is only set to increase.
This article will help your business understand and prepare for these two new regulatory requirements.
Payroll submission in Ireland
In Ireland, employees are taxed at source over three tax heads: Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI), and Universal Social Charge (USC). Employees are generally paid monthly in arrears, with employers settling the payroll taxes on these payments monthly through the Revenue Online Service (ROS)
The real-time reporting requirement mandates that payroll submissions are made each time employees are paid, ensuring transparency and compliance.
Expense reporting on travel and subsistence
As of 1 January 2024, employers are now required to report additional details on certain expenses and benefits made to employees and directors. This is in accordance with Section 897C in the Finance Act 2022. Employers must report on the date and amount paid for travel and subsistence. This scope of reporting applies to:
- Vouched travel expenses
- Unvouched travel expenses
- Vouched subsistence expenses
- Unvouched subsistence expenses
- Expenses for site-based employees
- Emergency travel expenses
- On-site meal expenses
These details must be submitted via the ROS on the payment date to the employee, or earlier. As non-compliance can result in penalties, you will need to adapt to these requirements and maintain timely reporting.
New auto-enrolment pension scheme
Another important update for employers is the auto-enrolment system, a new retirement savings scheme for employees that we expect to come into effect in 2025. The scheme involves employers matching their employees’ contributions of a set percentage of their gross income with a top-up from State funds.
As the Government work out the finer details of the scheme, it is understood that contributions will be gradually phased in over 10 years.
Details of the new pension scheme
All employees meeting the eligibility criteria will be automatically enrolled into the pension system. The scheme will apply to employees aged between 23 and 60 who earn over €20,000 annually. Employers must identify eligible employees and ensure they are enrolled in a qualifying pension scheme.
Under the new scheme, employees will initially contribute 1.5% of their salary, with employer contributions matching this amount. The contribution rate will gradually increase over time, reaching 6% for both employees and employers by 2030. The government will also provide a top-up contribution to enhance the retirement savings of employees. Employer contributions will be deductible for corporation tax purposes.
The system will operate on an opt-out basis with employees able to leave the scheme after six months of being enrolled, but they will be automatically re-enrolled after two years if they are still eligible. Ensuring that the enrolment and opt-out processes are managed correctly is crucial to adhering to the new auto-enrolment system and avoiding fines.
Stay ahead of your employer obligations
The complexities of these new requirements can present significant challenges for businesses, more so if you are new to this jurisdiction. Staying compliant will require diligent management and a thorough understanding of the latest regulations in Ireland. By working with a professional corporate service provider, you can be assured that all aspects of compliance are covered, allowing you to focus entirely on doing business in Ireland
For more information on how we can assist with your payroll and pension management, contact our firm today. Let us be your trusted payroll agent, ensuring your business stays compliant and your employees are well taken care of.
This article was written by Jane O'Connor, Tax Manager, at Hawksford Ireland.
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