Real-Time PAYE has supported five years of streamlined tax compliance, but employers face expanding reporting demands in 2024. Olive O’Donoghue outlines key deadlines and requirements in 2024
Real-Time PAYE has been up and running for five years and many will agree that the real-time system has introduced tax compliance efficiencies for employers and employees alike.
Employers still have significant reporting obligations that fall outside of the Real-Time PAYE, however.
Further, the scope of real-time reporting is expanding with the introduction of Enhanced Reporting Requirements and there is an obligation for employers to operate PAYE on the exercise of stock options from the start of 2024.
Below we outline key reporting deadlines and obligations employers need to put in this year’s calendar for timely action.
2023 Employer SARP return – February 2024
The deadline for employers to file a 2023 Employer SARP return is 23 February. The Special Assignee Relief Programme (SARP) provides personal income tax savings of up to 12 percent for employees who relocate to Ireland and meet certain conditions for up to five years.
The return covers both local employees and expats and requires details of earnings and the value of the SARP deduction provided through payroll per employee.
It also requires details of tax-free items, such as flights or school fees, which may not be readily available in the payroll data.
Employers should factor in the time it takes to collate off-payroll information and information on employees who have relocated to other jurisdictions.
It is essential to have a solid process for the timely collection of accurate information to avoid or minimise follow-up queries from Revenue.
2023 Employer Share Award Returns – March 2024
Employers are obligated to report details relating to various forms of share-based remuneration provided to employees in 2023 by 31 March this year.
This includes all Revenue-approved schemes but also unapproved stock options, restricted stock units and various other direct share awards.
Several different returns exist, so it is important for employers to report the right details on the right return.
All matters relating to unapproved share options are reported in Form RSS1. However, the return with the widest application for employers is the Employer Share Award (ESA) return.
The ESA is a catch-all return and covers all forms of share-based remuneration, including awards that are cash-settled and not specifically reportable on other share returns.
Specific returns then exist for KEEP, an Approved Profit Share Scheme (APSS), and a save-as-you-earn (SAYE) scheme.
Failure to comply with this mandatory filing obligation can result in a financial penalty for employers, so a timely review of share plans and cash-based incentive arrangements is crucial to determine if the employer has a reporting obligation.
Enhanced Employer Reporting from 1 January 2024
2024 heralds the rollout of the Enhanced Reporting Requirements (ERR) which places an obligation on employers to file an additional electronic return with Revenue on or before any payment or reimbursement of in-scope reportable benefits to an employee.
Reportable benefits include the remote working daily allowance of €3.20, certain categories of travel and subsistence payments, including vouched and unvouched payments, and benefits covered by the small benefits exemption.
ERR will enable Revenue to undertake more targeted PAYE reviews into certain expenses and benefits provided to employees.
Revenue has stated that it will not operate a compliance program or apply penalties for non-compliance with ERR until 30 June 2024.
While employers must comply with ERR from 1 January 2024, they should use the respite period to the end of June to continue to review and align expense systems to establish a robust process for managing ERR.
PAYE on stock options from 1 January 2024
Another significant change from the start of this year is the introduction of the requirement to operate PAYE when an employee exercises a stock option.
This represents a significant shift from the previous tax collection system whereby income tax, USC and PRSI payable on stock options were settled by the employee directly with Revenue within 30 days of exercise.
While the move to PAYE on the exercise of stock options will be welcomed by employees as it removes their obligation to settle their taxes, significant challenges may arise for employers who will be required to gather the necessary data to report the stock option gains via the payroll on a real-time basis.
PAYE must be operated even where an option is exercised by a former employee, for example. This can give rise to practical challenges related to timing and the ability of the employer to collect taxes from the individual.
Employers may also face challenges operating PAYE on stock options exercised by cross-border employees who worked in different countries throughout the vesting period. Employers will need to have access to accurate travel data to enable them to correctly determine the portion of any option gain that is taxable in Ireland.
Olive O’Donoghue is a Tax Partner with KPMG’s People Services tax practice
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