Employer's PAYE Records
- Employer system of PAYE/PRSI
- Procedure at the end of the tax year & before beginning of the following year
- Errors made in deducting or refunding tax
- Change of employee's personal public service number
- Inspection of employer's records
- Tax credit certificates
- Employee's tax credit certificate
- Employer's tax credit certificate
- A certificate is issued for each employment
- "Multi-year" tax credit certificates
- Tax credits and standard rate cut-off point under appeal by employee
- Amended tax credit certificates
- Employers always to use certificate with the latest date of issue
- Tax deduction cards
- Amended tax deduction cards
- Temporary / emergency tax deduction card
1. Employer system of PAYE/PRSI
An employer may choose to use one of the following PAYE/PRSI systems:
- a computerised system
- a PAYE/PRSI record system of their own design
- the services of a payroll bureau
- the Electronic Tax Deduction Card
Revenue has discontinued the issue of paper tax deduction cards (TDCs) with effect from 1 January 2009 as they are no longer the most practical method of recording PAYE/PRSI information. An Electronic Tax Deduction Card is available to assist employers who wish to record payroll information in this manner (see paragraph 7).
Employers can register for the Revenue On-Line Service ROS (see Revenue Online Service) or receive paper tax credit certificates.
An employer who wishes to change from one system to another should advise Revenue before using an alternative system.
All employers, no matter what system they use, are required to comply with the PAYE requirements and procedures set out in this Guide. If the employer is using the services of a payroll bureau or other agency to operate the PAYE/ PRSI system in respect of their employees, they are still responsible for ensuring that the system in use conforms to statutory requirements.
2. Procedure at the end of the tax year & before beginning of the following year
See Employers Duties at the end of the Income Tax Year part 3 and part 11 regarding the completion of the employee's PAYE record at the end of the tax year and Employer's Duties Before Income Tax Year Commences parts 1 and 2 regarding the setting up of the record for the coming tax year.
3. Errors made in deducting or refunding tax
It is very important that the entries on the PAYE record should be made correctly. The tax, which the employer is liable to pay over to the Collector General, is the total tax deductible from the salaries or wages etc. paid to the employees, less any refunds of tax made by the employer.
Errors discovered during the year
If the employer finds during the course of the year that an error has been made in deducting tax in an earlier week or month, the matter should be put right in the week or month in which the error is discovered. The original entries should not be altered or erased but a note should be made against them to indicate that the error has been discovered and put right in the later week (or month).
Large under-deductions
No attempt should be made to adjust an under-deduction of tax where it is so large that it cannot be put right in the week or month in which it is discovered, or if to do so could cause considerable hardship to the employee. This would apply, for example, if tax had been under-deducted over a long period in the case of a weekly wage earner so that the total under-deduction amounted to a sum exceeding a week's wages.
Any such case should be reported at once to Revenue who will give any instructions necessary.
See Employer's Duties at the end of the Income Tax Year part 3 to 6 regarding errors discovered at the end of the tax year and the employer's liability for tax under-deducted.
4. Change of employee's personal public service number
In a limited number of cases Revenue or the Department of Social Protection will advise the employer that the personal public service (PPS) number of an employee has been changed.The employer must ensure that they receive a new tax credit certificate or tax deduction card under the new PPS number before inputting this new number on their own records. Where such a change is advised, the PAYE/PRSI records kept under the former PPS number should be transferred to and continued under the new PPS number.
5. Inspection of employer's records
Officers of Revenue are empowered to inspect an employer's records from time to time in order to satisfy themselves that the correct amounts of tax are being deducted, or have been deducted, and paid over to Revenue. All documents and records relating to the calculation or payment of pay or the deduction of tax or calculation of PRSI contributions (wages sheets, tax deduction cards, etc) must be retained by the employer for six years after the end of the tax year to which they refer (or for such shorter period as Revenue may authorise by notice in writing to the employer) and must be available for inspection by an authorised Revenue officer. For further information on Revenue audit, please see the Code of Practice for Revenue Auditors.
6. Tax credit certificates
6.1 Employee's tax credit certificate
Revenue issues a tax credit certificate to every employee who makes a claim for tax credits. The certificate sets out in detail the amount of tax credits and standard rate cut-off point that Revenue has determined to be due to the employee.
Tax credits
Under the tax credit system an employee is entitled to tax credits depending on personal circumstances e.g. married person's tax credit, employee (PAYE) credit, trade union subscriptions tax credit, etc.
Tax credits are non-refundable. Any unused tax credits are carried forward on a cumulative basis to subsequent pay period(s) within the tax year where a cumulative tax credit certificate is held (see Calculation of Tax Under the PAYE System part 5).
Standard rate cut-off point
A standard rate cut-off point is the amount of the individual's personal standard rate tax band.
In each pay period, weekly, fortnightly or monthly, an employee pays tax at the standard rate of tax up to their standard rate cut-off point. Where the employee has any pay in that period over the cut-off point the excess over the standard rate cut-off point is taxed at the higher rate of tax.
Where an employee's standard rate cut-off point exceeds net pay in a pay period, the unused amount is carried forward on a cumulative basis for use in the next pay period within the tax year where a cumulative tax credit certificate is held.
See paragraph 9.2 for the PAYE procedures to be followed where no certificate of tax credits and standard rate cut-off point is received by the employer for an employee.
6.2 Employer's tax credit certificate
(See sample tax credit certificate in Sample forms)
In addition to issuing an employee tax credit certificate to each employee, (see part 1 above), Revenue also issues a tax credit certificate to the employer.
The employer certificate shows:
- The total amount of the employee's tax credit
- The total amount of the employee's standard rate cut-off point
- The rates of tax payable by the employee
- The employee's previous pay and tax from 1 January, if applicable (see New Employees and Employees Recommencing part 9 )
The employer tax credit certificate also shows where the employee/pensioner is entitled to Tax Exemption and Marginal Relief (see Calculation of Tax Under the PAYE System part 10).
No information regarding the personal circumstances of the employee is disclosed on the employer's certificate. It shows only the total amount of the tax credits and standard rate cut-off point to which the employee is entitled together with the equivalent weekly and monthly figures.
6.3 A certificate is issued for each employment
A tax credit certificate is issued in respect of each employment. Where an employee has more than one employment concurrently (e.g. full-time employment during the day and part-time employment in the evening) a separate tax credit certificate will be issued to each employer in respect of each employment. (See New Employees and Employees Recommencing part 3)
6.4 "Multi-year" tax credit certificates
A tax credit certificate may be valid for one year or for more than one year. An instruction on the certificate will indicate that it is valid either:
- For the year 1 January YYYY to 31 December YYYY and following years or
- For the year YYYY only, commencing 1 January YYYY or
- For the period DD MM YYYY until 31 December YYYY and each subsequent year on a Week1/Month1 basis
Where a certificate is in the first and third categories, the employer will continue to use the certificate as the basis for tax deduction for each succeeding income tax year until an amended certificate is received.
6.5 Tax credits and standard rate cut-off point under appeal by employee
An employee who advises the employer that the amounts on their tax credit certificate is wrong or is the subject of correspondence with Revenue, should be advised that the employer is obliged to act in accordance with the most recently issued tax credit certificate or tax deduction card until amended instructions have been received from Revenue.
The employer should continue to deduct tax by reference to the tax credit certificate until an amended certificate is issued, even if advised by the employee that a higher tax credit/standard rate cut-off point is due or has been claimed.
Only Revenue can advise an employer of changes to a tax credit certificate.
6.6 Amended tax credit certificates
An amended tax credit certificate will issue to an employee whose tax credits/standard rate cut-off point have been changed. The date from which the amended certificate is to have effect (normally the previous 1 January) will be given on the certificate. An amended employer tax credit certificate will be sent directly to the employer at the same time. The employer will operate PAYE on the basis of the amended certificate.
Note
It is Revenue policy not to issue an amended tax credit certificate that would cause hardship to the employee. Where the implementation of an amended cumulative tax credit certificate generates a nil salary or a large underpayment the employer should contact Revenue for verification.
6.7 Employers always to use certificate with the latest date of issue
Each tax credit certificate bears the date of issue. Where more than one amended certificate is issued, the employer should always operate PAYE on the basis of the certificate showing the most recent date of issue unless otherwise directed by Revenue.
7. Tax deduction cards
Revenue has discontinued the issue of paper tax deduction cards (TDCs) with effect from 1 January 2009 as they are no longer the most practical method of recording PAYE/PRSI information.
As an alternative to the paper TDC, an Electronic Tax Deduction Card is available to assist employers who wish to record payroll information in this manner. The electronic Tax Deduction Card allows you to:
- complete the employee's record on screen
- save the record electronically on your computer
- print the record
- print a blank tax deduction card and complete it by hand
Employers are authorised by Revenue to use an alternative document to the tax deduction card to record details of employee pay, PAYE and PRSI deducted.
The paragraphs following, 7.1 to 8.3, detail the tax deduction card procedures in place up to 31 December 2008.
(See sample paper tax deduction card in Sample Forms)
7.1 The tax deduction card
Revenue supplied a tax deduction card (form P9/P11) for each employee to employers who used the tax deduction card system up to 31 December 2008. Each tax deduction card shows the employee's name, Personal Public Service (PPS) number, the total tax credit and standard rate cut-off point to which the employee is entitled for the income tax year, the tax rates to be applied and
- the cumulative tax credits and standard rate cut-off point figure for each week from week 1 to week 52 or for each month from month 1 to month 12 (Calculation of Tax Under the PAYE System part 4) where the employee is monthly paid or
- the non-cumulative ("week 1") tax credit and standard rate cut-off point figure for each week from week 1 to week 52 or the non-cumulative ("month 1") figure for each month from month 1 to month 12 (Calculation of Tax Under the PAYE System part 6) where the employee is monthly paid
- the total pay and tax to date for the employee (if applicable and if available)
will be shown on the tax deduction card at the week before the employee commenced in the new
employment (See New Employees and Employees Recommencing part 9).
The total pay and tax will not be shown where a tax deduction card is issued on a week1 /month1 basis. - if the employee is entitled to tax exemption and marginal relief, the higher rate of tax will be shown as 40%. (See Calculation of Tax Under the PAYE System part 10)
The tax deduction card will be used to record the employee's details of pay, tax, PRSI contributions and other data, until the end of the tax year or until it is replaced by an amended card (paragraph 8). Instructions on how to complete the tax deduction card are printed on the card. (See also Pay Related Social Insurance (PRSI) part 2)
8. Amended tax deduction cards
8.1 Amended tax deduction cards issued on a cumulative basis
When the tax credits and standard rate cut-off point of an employee are amended, an amended tax deduction card is issued to the employer. The employer should transfer the following information from the old card to the corresponding columns or boxes on the new card:
- the final entries on the old card for cumulative pay to date and cumulative tax
- the totals of the PRSI entries on the old card for (i) employee's contributions and (ii) total contributions
The information above should be entered in the corresponding columns of the new card on the line immediately above the line for the entries relating to the first pay day after the new card is received.
- any entries in boxes F4, F5, C2, B4, C3 and F3 on the old card.
The employer should operate PAYE on the amended card on the cumulative basis as instructed on the card. The old card should be marked "transferred to new tax deduction card" and retained with the new card.
Note: It is Revenue policy not to issue an amended tax deduction card that would cause hardship to the employee. Where the implementation of an amended cumulative tax deduction card generates a nil salary or a large underpayment the employer should contact Revenue for verification.
8.2 Amended tax deduction cards issued on a non-cumulative basis (week 1/month 1 basis)
Where a tax deduction card showing tax credits and standard rate cut-off point on a cumulative basis is replaced by one showing amended credits and cut-off point on a non-cumulative basis (week 1/month 1 basis), the employer should transfer the following from the old card to the new card, as described above:
- the total of the pay figures entered to date on the old card (this should be entered in the "cumulative gross pay" column of the new card even though the cumulative basis of tax deduction does not apply)
- the total of the tax figures entered to date on the old card
- the totals of the PRSI entries on the old card to date for (i) employee's contributions and (ii) total contributions
- any entries in boxes F4, F5, C2, B4, C3 and F3 on the old card.
PAYE should be operated on the new card on a week 1/month 1 basis as instructed on the card. The old card should be marked "transferred to new tax deduction card" and retained with the new card.
The pay and tax totals from the old card will be disregarded for the purposes of calculating tax on the non-cumulative basis (week 1/month 1 basis) but the pay figure should be taken into account for the purposes of the PRSI ceiling.
8.3 Change from non-cumulative basis (week 1/month 1 basis) to cumulative basis
Where a tax deduction card showing tax credits and standard rate cut-off point on a non-cumulative basis (week 1/month 1 basis) is replaced by one showing amended credits and cut-off point on a cumulative basis the information from the old card should be transferred as described above in paragraph 8.2. The old card should be marked "transferred to new tax deduction card".
9. Temporary / emergency tax deduction card
A single card (form P13/P14) is provided for use either as a Temporary tax deduction card or as an Emergency tax deduction card. (See sample card in Sample forms)
9.1 The temporary tax deduction card
Explanatory notes on the completion of the temporary basis tax deduction card are given on the card. "Employee" and "employer" details should be entered at the top of the form as far as information is available. First names should be written in full e.g. John Murphy, not J. Murphy.
The temporary tax deduction card must be used when the employer has been given parts 2 and 3 of a form P45 stating:
- the employee's PPS number and
- the employee was not on the emergency basis and
the employer has sent part 3 of the form P45 to Revenue and are awaiting the issue by Revenue of a tax deduction card (see Calculation of Tax Under the PAYE System part 7 and New Employees and Employees Recommencing part 5).
The entries on the temporary tax deduction card are made on a non-cumulative basis (week 1/month 1 basis) and the calculation of tax due each week (or month) is done on the same basis as in the week 1/month 1 procedure explained in Calculation of Tax Under the PAYE system.
A refund of tax should not be made to the employee where a temporary tax deduction card is in use.
The temporary procedure continues until a tax deduction card is received from Revenue, at which point the employer should follow the instructions on the new card.
9.2 The emergency tax deduction card
Explanatory notes regarding the operation of the emergency basis of tax deduction (Calculation of Tax Under PAYE System parts 8 and 9) are provided on the card. "Employee" and "employer" details should be entered at the top of the form as far as information is available. First names should be written in full e.g. John Murphy, not J. Murphy. If the employer knows the employee's PPS number, it must also be entered.
The emergency tax deduction card should be used when:
- The employer has not received, in respect of the employee, either
- a tax credit certificate or a tax deduction card for the current year, or
- a tax credit certificate or a tax deduction card for a previous year which states that the certificate or tax deduction card is valid for subsequent or following years (see paragraph 6.4), or
- a form P45 for the current year or previous year, or
- The employee has given the employer a completed form P45 indicating that the emergency basis applies, or
- The employee has given the employer a completed P45 without a PPS number and not indicating that the emergency basis applies.
A refund of tax should not be made to the employee where an emergency tax deduction card is in use.
Where a tax deduction card is issued for an employee for whom an emergency tax deduction card was completed, the employer should follow the instructions on the new card.
