Employer’s Duties at the end of the Income Tax Year

  1. End of year check list for employers
  2. Week 53, fortnight 27, etc
  3. Completion of employee's PAYE / PRSI record
  4. End of year pay figure
  5. End of year tax figure
  6. Errors discovered at the end of the year
  7. Completion of end of year returns
  8. How to complete form P35L
  9. Important points to remember
  10. Dates for lodging returns
  11. Certificates to employees (form P60)

1. End of year check list for employers

At the end of the income tax year the employer must:

It is important to note that the term "employee" includes directors and occupational pensioners.

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2. Week 53, fortnight 27, etc

"Week 53" occurs when there are fifty-three weekly pay days in the year. This happens when a pay day falls on 31 December or, in a leap year, on 30 or 31 December. The employer should set tax credits and the standard rate cut-off point against that payment on a non-cumulative basis (week 1/month 1 basis) in accordance with the following table:

Pay day falling on 31 December (or in a leap year on 30 or 31 December):
If the number of pay days in the tax year is: Then tax credits and the standard rate cut-off point to be set against payment is:
53 Weekly As for week 1 basis ( paragraph 2 - Employee Pay Day – Calculating Tax Due)
27 Fortnightly As for week 1 basis ( paragraph 3 - Employee Pay Day – Calculating Tax Due)
14 Four-weekly As for week 1 basis (paragraph 4 Employee Pay Day – Calculating Tax Due)

As a result, the employee will get the benefit of more than the year's total tax credits and standard rate cut-off point.

If the emergency basis applies, the tax credits and standard rate cut-off point, if any, and the rate of tax deduction will depend on the number of calendar weeks or months since the emergency basis first applied, within the tax year, to the employee's pay (see Calculation of tax under the PAYE System paragraphs 8 - 9).

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3. Completion of employee's PAYE / PRSI record

At the end of the tax year the employer should complete the PAYE/PRSI record for every person employed at any time during the tax year (electronic tax deduction card, emergency tax deduction card, temporary tax deduction card or "own system" type record), prior to entering the required information on forms P35 and P35L (paragraph 8. How to complete form P35L).

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4. End of year pay figure

The figure for total pay for the year is the amount of "net pay" as defined in (Definition of Pay paragraph 1) paid by the employer to the employee in the course of the tax year.

Under the cumulative system the amount of pay from employments with other employers (advised to the employer by Revenue) will be entered on the employee's PAYE record in the course of the year. This should be deducted from the cumulative pay figure for the year to arrive at the end of year pay figure.

Where an emergency tax deduction card or temporary tax deduction card was replaced during the year by a different payroll record the pay figure carried over to the payroll record may include pay from a previous employment as well as pay from the current employment during the period for which the emergency or temporary basis of tax deduction was operated. In such a case only the pay from the employment with another employer should be deducted in arriving at the end of year pay figure.

Where an employee had separate periods of employment during the year with the same employer the total pay for all the periods should be taken for P35 end of year return purposes.

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5. End of year tax figure

The figure for total tax deducted during the year is the total tax deducted by the employer less any refunds made by the employer. (If these refunds exceed the tax deducted the "net tax refunded" figure should be shown on the PAYE record).

Under the cumulative system the amount of tax deducted from pay from employments with other employers (advised to the employer by Revenue) will be entered on the employee's PAYE record in the course of the year. This should be deducted from the cumulative tax figure for the year to arrive at the end of year tax figure.

Where an emergency tax deduction card or temporary tax deduction card was replaced during the year by a different payroll record the tax figure carried over to the payroll record may include tax deducted by a former employer as well as tax deducted by the current employer during the period for which the emergency basis or temporary basis of tax deduction was operated. In such a case only the tax deducted by a former employer should be excluded from the final tax figure.

Where an employee had separate periods of employment during the year with the same employer the total tax for all periods should be taken for P35 end of year return purposes.

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6. Errors discovered at the end of the year

The final figure entered on the employee's PAYE record for tax deducted should equal the total of the amounts actually deducted by the employer during the year. An employer who finds that there is a difference between the figures should enter the amount actually deducted as the final figure. If there was an under deduction of tax the employer may not recover it from the pay of a later tax year. The employer remains liable to pay to the Collector General the tax properly due unless it can be shown that reasonable care was exercised and that the under deduction of tax was due to a bona fide error.

Retention of PAYE/PRSI records - See Employer's PAYE Records paragraph 5

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7. Completion of end of year returns

Before the end of the tax year Revenue, P35 Unit, will send to every eligible registered employer forms P35 Declaration, P35LF, P35L and P35L/T, if the employer is operating a paper based system, on which to make the end of year returns. (Where an employer ceases to have employees during the course of the year the forms will be issued to the employer, on request, at the time of cessation (paragraph 10). The P35 End of Year Return must be returned within 46 days from the end of the tax year, or 46 days from the date on which the employer ceases permanently to be an employer.

Employers who submitted their last P35 end of year return on-line via the Revenue On-Line Service (ROS) require no forms and will receive a reminder on-line to submit the P35 Return.

Form P35 is the employer's annual declaration and certificate for tax and PRSI purposes. It should be completed in accordance with the notes given on the form (See sample form P35 in Sample Forms).

Form P35L is the list on which the employer makes the return of PAYE and PRSI particulars in respect of each employee. One entry only should be made for each employee on form P35L. It should be completed in accordance with paragraph 8. How to complete form P35L.

Tax relief on medical insurance is normally granted at source on all premiums. Where an employer pays medical insurance as Benefit-in-Kind, the employer pays the lower premium and repays the tax credit to Revenue through the Corporation Tax return/payment. The employee, whose medical insurance has been paid by the employer, must then claim the tax credit individually. The addition of this field from the end of 2007 will enable Revenue to identify employees who have not claimed the appropriate tax credit and process this information with a view to granting the tax credit to the individual.

To facilitate employers in completing forms P35L the name and PPS number of each person who, according to Revenue records, was employed by that employer during the year, will be listed on the forms before issue except where the employer ceases to have employees before the end of the income tax year (paragraph 10. Dates for lodging returns).

Form P35L/T is a form on which the employer makes the return of PAYE and PRSI particulars in respect of each employee whose PPS number is not known. One entry only should be made for each employee on the form. The employee's private address, date of birth and mother's pre-marriage name (if applicable) must be given on form P35L/T.

Important: A Return must be made for every person employed at any time during the tax year even if no tax was deducted. If an employee is not listed on form P35L when these forms are issued the employer must enter the name and PPS number on one of the blank lines provided on the form.

Form P35LF is the form used to record Total Taxable Benefits. Taxable Benefits are non-cash benefits provided to employees on which PAYE, PRSI and Health Contributions must be operated by employers in respect of the taxable value of those benefits - See Definition of Pay paragraph 5.2

Form P35LF is also used to record contributions to pension products. The following information is required:

Retirement Benefit Scheme

  • Number of employees who contributed to retirement benefit schemes by way of deduction from payroll during the year
  • Total amount contributed by employees to retirement benefit schemes by way of deduction from payroll which qualifies for tax relief
  • Number of employees for whom the employer made contributions to retirement benefit schemes
  • Total amount contributed by employer on behalf of employees to retirement benefit schemes during the year

Personal Retirement Savings Account (PRSA)

  • Number of employees who contributed to PRSA products by way of deduction from payroll during the year
  • Total amount contributed by employees to PRSA products by way of deduction from payroll during the year which qualifies for tax relief
  • Number of employees for whom PRSA contributions made by employer during the year
  • Total amount contributed by employer on behalf of employees to a PRSA Scheme during the year

Retirement Annuity Contract

  • Number of employees who contributed to Retirement Annuity Contracts by way of deduction from payroll during the year
  • Total amount contributed by employees to Retirement Annuity Contracts by way of deduction from payroll during the year which qualifies for tax relief.

Revenue-On-Line Service (ROS)

Employers who use a computer based payroll system can submit their P35 Return via ROS. In order to do so, they should have Internet access and the payroll package used must be compatible with ROS. A full list of compatible packages is available on the ROS homepage. If in doubt as to whether the payroll package in use is ROS compatible, employers should contact their software vendor.

Forms P30 / P35/ P35L / P35LF can also be filed through our Revenue On-Line Service (ROS) - See Revenue on-line service.

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8. How to complete form P35L

Particulars for each employee should be transferred from the relevant boxes on the PAYE/PRSI record (paragraph 3) to the corresponding columns on form P35L. The particulars required are:

  • Pay.
  • Net tax deducted or net tax refunded (enter R in preceding box if net tax refunded).
  • Employee's share of PRSI contributions.
  • Total amount of PRSI contributions (employer & employee share).
  • Total number of weeks of insurable employment.
  • Initial social insurance contribution class.
  • Second contribution class (i.e. second class in that employment) at end of year if there was a change of class during the year.
  • Number of weeks of insurable employment at second class.
  • Third contribution class (i.e. third class in that employment) if there was a further change of class during the year.
  • Number of weeks of insurable employment at third class.
  • Fourth contribution class (i.e. fourth class in that employment) if class changed four times during the year.
  • Number of weeks of insurable employment at fourth class.
  • Value of Benefit In Kind - Medical Insurance only - Paid by employer for employee, if any.
  • Date of commencement of employment if this occurred during the year.
  • Date of cessation of employment if this occurred during the year.

In addition to the particulars set out above the employer must indicate, where relevant, on the employee listing form (P35L), whether the emergency basis (Calculation of Tax Under the PAYE System paragraphs 8 - 9) or temporary basis (Calculation of Tax Under the PAYE System paragraph 7) of tax deduction was being operated in respect of the employee's pay at the end of the year or period to which the Return relates (1 should be entered in the relevant box to indicate temporary basis, 2 to indicate emergency basis).

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9. Important points to remember

  • A Return must be made for every person employed at any time during the year ended on 31 December even if no tax was deducted. If an employee is not listed on form P35L when these are issued, the employer must enter the name, PPS number and other information required on one of the blank lines provided on the form.
  • Where an employee's PPS number is not known and form P35L/T is being completed, it is very important that the employee's full name, full private address, date of birth and mother's pre-marriage name (if applicable and available), are entered. A business address is not sufficient.
  • The details supplied by the employer will be transferred directly to computer record. It is therefore very important that all entries are written distinctly.
  • Only one entry should be made for each employee. If an employee had more than one period of employment with the employer in the course of the year, the employer should combine the details for all periods and enter the totals in respect of all those periods of employment under each heading on form P35L. (Note, the pay and tax entries required on the P35L are slightly different to the entries required on the P60 - see paragraph 11. Certificates to employees (form P60))
  • The particulars on the return should relate only to the employment with the employer (see paragraph 4. End of year pay figure and paragraph 5. End of year tax figure regarding exclusion of pay and tax in other employments).
  • Particular care should be taken to ensure that the PPS number, exactly as shown on the tax credit certificate or on the tax deduction card is accurately entered on the return for each employee. The PPS number may have eight or nine "characters" i.e. 7 digits and 1 letter or 7 digits and 2 letters (see New Employees and Employees Recommencing paragraph 3). An incorrect entry of the PPS number will cause delay or difficulty in paying social insurance benefits to the employee in question.

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10. Dates for lodging returns

An employer who continues in business until the end of the income tax year must send to Revenue, by 15 February:

  • form P35 - the employer's declaration and certificate
  • form P35L - the return in respect of each employee
  • form P35LF - taxable benefits and pension products contributions
  • any balance of income tax or PRSI due (with completed form P35)

Printed electronic tax deduction cards, emergency tax deduction cards and temporary tax deduction cards superseded in the course of the year by printed electronic tax deduction cards, and "own system" type records should not be sent to Revenue but should be retained in accordance with Employer's PAYE Records paragraph 5

An employer who ceases to have employees during the course of the year must lodge completed returns within 46 days of ceasing to be an employer. The employer in this case must apply to Revenue, P35 Section for forms P35 and P35L. In such a case the names and PPS numbers of employees will not be pre-printed on the form and it will be necessary for the employer to enter these particulars on the form together with the other information required.

Penalties

There are severe penalties, including imprisonment, for failure to lodge end of year returns within the time provided. It is therefore in the employer's own interest to carry out, without delay, the procedures outlined in this chapter whether at the end of the tax year or following cessation in the course of the year. Also, employers who do not lodge their P35 return on time may cause their employees unnecessary difficulty and delay when claiming Social Welfare benefits.

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11. Certificates to employees (form P60)

(See sample form P60 template in Sample Forms)

Between 1 January and 15 February the employer must give to every employee who was in their employment on 31 December, a certificate on form P60 showing Total Pay, Tax and PRSI contributions for the year ended on 31 December. These figures should be copied from the payroll record.

Revenue no longer issue P60 stationery. A P60 template is available on the ROS online and offline application. Employers can print P60’s (and duplicate copies, as required) for their employees on their own blank stationery from this template. The P60 template is also available through Payroll Software providers.

The certificate will show the amount of "net pay" (Definition of Pay paragraph 1) paid during the year. In isolated cases the employee may require a statement of the amount earned in the year as distinct from the amount actually paid and this should be given separately on request.

Completing the P60 pay and tax figures

When an employee has worked for the same employer a number of times during the tax year, the pay figure which the employer enters on the P60 at Section (A) PAY Question 3 'Pay in respect of this employment' is the figure of pay in respect of the latest period of employment.

Example:

Employee works for 4 periods during the tax year with the same employer

Period 1: 1 January to 15 February

Period 2: 21 April to 10 June

Period 3: 18 August to 29 September

Period 4: 24 November to sometime in the following tax year

When the employer issues a P60 on 31 December, the employee's Pay figure for the period of employment from 24 November to 31 December only should be entered at Section (A) 3 on the P60. The employee's Tax figure for the period 24 November to 31 December only should be entered at Section (B) 3 on the P60.

The Total Pay and Tax from all employments for the period 1 January to 31 December (including other employers, if any) should be entered on the P60 at Sections (A) 1 and (B) 1 respectively.

The 'date of commencement of employment' entered at Section (C) 7 is the date of commencement of the latest period of employment - 24 November.

Note:
Employers should note that the pay and tax entries required on the P60 are slightly different to the entries required on the P35L - see paragraph 9. Important points to remember . When an employee has worked for the same employer a number of times during the tax year, the pay and tax figures that the employer enters on the P35L at J6 and J7 are the combined details of pay and tax for all periods with that employer for the full year.

In the example above, the entries at J6 and J7 on the P35L will be the combined details of pay and tax for the 4 periods of employment with that employer.

Important: The P60 certificate should not be given to an employee who was not in the employment on 31 December.
An employee who was in employment on 31 December and ceased that employment on 31 December should be given a form P45 and a form P60.

(Adobe Acrobat Reader PDFExternal link)

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