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Tax and Duty ManualPart 42-04-35The Employers’ Guide to PAYEPart 42-04-35This manual remains applicable until the 31 December 2018.Please refer to Part 42-04-35A which has been created in preparation for PAYEModernisation effective from 1 January 2019.Document last reviewed July 2021The information in this document is provided as a guide only andis not professional advice, including legal advice. It should not beassumed that the guidance is comprehensive or that it provides adefinitive answer in every case.1

Tax and Duty ManualPart 42-04-35Table of ContentsChapter 1 - Introduction.81.1 The Pay As You Earn (PAYE) system.81.2 Brief outline to this Guide.81.3 Key messages for employers .91.4 Income tax calendar.91.5 PAYE forms.91.6 Determining the employment status of an individual .91.7 Assistance to employers .111.7.1 Revenue website.111.7.2 Revenue Online Service (ROS) .111.7.3 Employer helpline .121.7.4 Collector General .121.7.5 PRSI queries .131.7.6 National Phone number for PAYE employees.13Chapter 2 - Registration of employers for PAYE purposes .142.1 Register of employers .142.2 Domestic employments .142.3 e-Registration .142.4 Registration by paper.152.5 Compulsory registration by Revenue.162.6 Register of Employees .162.7 Employer ceases to have employees .162.8 Death of an employer .162.9 Change of ownership of a business .162.10 Separate registration numbers for the same employer .172.11 Payment.17Chapter 3 - Definition of pay .183.1 Gross pay / Taxable pay .183.2 Employees’ superannuation contributions.183.3 Deductions from gross pay in calculating taxable pay.213.4 Pay for USC purposes.213.5 Pay for PRSI purposes .223.6 What pay includes .223.6.1 Non-cash payments .233.6.2 Any liability of an employee which is paid by the employer .243.6.3 ‘Tax free’ payments .243.6.4 Payments towards the cost of travelling between home and work .253.6.5 Round sum expenses payments .253.6.6 Certain premiums under pension and insurance schemes.253.6.7 Service charges in hotels etc. paid out by/on behalf of the employer .253.6.8 Wages payments in advance or on account .253.6.9 Pay credited to an employee's or director's account .253.6.10 Payments made to an employee absent due to illness .263.6.11 Certain lump sum payments made on retirement or on leaving office (includingpay in lieu of notice) .262

Tax and Duty ManualPart 42-04-353.6.12 Lump sum payments made to an employee as compensation for change inworking procedures .283.6.13 Payments to election workers .293.6.14 Foreign sourced employment income .293.7 Items not to be treated as pay.293.7.1 Salary sacrificed for a travel pass scheme .293.7.2 Rent-Free Accommodation.303.7.3 Lump Sum weekly payment or resettlement allowance .303.7.4 Reimbursement of expenses incurred by the employee .303.7.5 Annual membership fees paid to a professional body .313.7.6 Refunds of superannuation contributions .313.7.7 Provision of Bicycles for Directors and Employees – Exemption from Income Tax inrespect of Benefit-In-Kind.313.8 PAYE Exclusion Orders .333.9 Employment carried on outside the State.35Chapter 4 - Expenses payments paid to employees.364.1 Flat rate (employment) expenses .364.2 Expenses payments made to the employee - round sum.364.3 Expenses payments made to directors .364.4 Reimbursement of expenses other than expenses of travel and subsistence .364.5 Subsistence payments .374.6 Motoring / bicycle expenses.38Chapter 5 - Treatment of foreign sourced employment income .405.1 PAYE and foreign employments.405.2 Further Information .40Chapter 6 - Special Assignee Relief Programme (SARP) .416.1 Introduction .41Chapter 7 - Employers’ PAYE records .427.1 Register of employees .427.2 Procedure at the end of the tax year and before the beginning of the following year 427.3 Errors made in deducting or refunding tax.427.4 Change of employee's Personal Public Service number .427.5 Inspection of employers’ records .437.6 Tax credit certificates.437.6.1 Employees’ Tax credit certificates .437.6.2 Employers’ tax credit certificate (P2C).447.6.3 ‘Multi-year’ tax credit certificates.447.6.4 Tax credits and rate bands appeal by employee.457.6.5 Amended tax credit certificates.457.6.6 Employers always to use certificate with the latest date of issue .45Chapter 8 - Universal Social Charge (USC).468.1 Introduction .468.2 Rates of USC.468.3 Exempt Categories .478.4 Emergency basis of USC.478.5 Gross pay for PAYE/PRSI/USC purposes .488.6 USC and Exclusion Orders .488.7 Certain Bank Bonuses .493

Tax and Duty ManualPart 42-04-358.8 Week 53 payments .498.9 Arrears of pay due to an employee who has ceased employment .508.10 Employee and employer contributions to a Permanent Health Insurance (IncomeContinuance) scheme .518.11 Personal Retirement Savings Account (PRSA) .518.12 Redundancy Payments .518.13 Retirement Lump Sums .528.14 Maintenance Payments .528.15 Community Employment Schemes and USC.538.16 The difference between the Income Tax (PAYE) Exemption marker and the USCExemption marker .538.17 USC Exemption and refunds .548.18 Further information .54Chapter 9 - Calculation of tax and USC under the PAYE system.559.1 Employers’ duty to deduct tax and USC .559.2 Calculation of tax - 4 different methods .559.3 Cumulative basis .559.3.1 Cumulative tax credits and tax and USC cut-off points.579.3.2 Tax and USC deductions and refunds by the employer (cumulative basis) .599.4 Non-cumulative basis (week 1/month 1 basis).619.5 Temporary basis.629.6 Emergency basis .629.6.1 Emergency Basis of USC deduction.639.6.2 Emergency Basis of Tax deduction.639.7 Separate periods of employment with one employer treated as one continuousperiod for emergency basis purposes .659.8 Tax exemption and marginal relief .669.9 USC exemption .67Chapter 10 - Employee pay day – calculating tax and USC due.6810.1 Applying tax credits and tax and USC cut-off points.6810.2 Weekly pay .6810.3 Fortnightly pay.6910.4 Four-weekly pay.7010.5 Monthly pay.7110.6 Twice-monthly pay .7110.7 Quarterly pay .7210.8 Half-yearly pay .7210.9 Yearly pay.7310.10 Payments at irregular intervals (continuous employment) .7310.11 Payments made other than on the employee’s regular pay day.7410.12 Deduction of tax and USC from ‘holiday pay’ .7510.13 Salary and other payments earned before 1 January but paid on or after that date.7610.14 Recoupment of overpaid salary, allowances and expenses .76Chapter 11 - Social welfare payments .7811.1 Introduction .7811.2 Taxation of Illness Benefit, Occupational Injury Benefit and Partial Capacity Benefit7811.2.1 How the reduction in tax credits and tax cut-off point operates .784

Tax and Duty ManualPart 42-04-3511.2.2 How Payroll operates while the employee is out sick .8011.2.3 Illness Benefit payments payable at the end of the year (2017) .8111.3 Jobseeker's benefit .8411.4 Tax treatment of Maternity, Adoptive and Health & Safety Benefits .8411.5 Taxation of Paternity Benefit .86Chapter 12 - Refunds of income tax and USC to the employee .8812.1 Recording of refunds .8812.2 Refunds arising from the operation of the cumulative system .8812.3 Absence from work for some cause .9012.4 Reimbursement of employer for tax and/or USC refunded to employee .9112.5 Refund of tax and USC during unemployment .91Chapter 13 - Local Property Tax – deduction in payroll .9213.1 Introduction .9213.2 Applying the figure of LPT shown on the P2C in payroll .9213.3 Notification to stop deducting LPT from an employee’s salary .9313.4 LPT applied to holiday pay paid in advance of the usual pay day.9413.5 LPT deductions where an individual has two periods of employment with the sameemployer in the year .9413.6 Insufficient net pay in a pay period to pay LPT.9513.7 LPT deduction where the employee is absent from work on sick leave or maternityleave throughout the year.9513.8 LPT deduction where an employee is off pay and is due a refund of PAYE and/or USCin cumulative payroll .9513.9 LPT deduction in week 53, fortnight 27, etc .9513.10 Priority of LPT deduction in payroll .9513.11 LPT deductions where employee leaves mid pay period.9813.12 Arrears of pay paid to an ex-employee and LPT .99Chapter 14 - Employers’ duties before the income tax year commences.10014.1 Issue of tax credit certificates (P2Cs) to employers.10014.2 Employee leaving before beginning of tax year.100Chapter 15 - New employees and employees recommencing .10115.1 When a new employee commences employment (or an employee resumesemployment after a previous cessation)? .10115.2 What is a ‘new employee’?.10315.3 Personal Public Service Numbers .10315.3.1 The format of the employee PPS number .10415.3.2 W-Numbers.10515.4 PRSI contributions.10615.5 Employee's previous pay, tax and USC notified to the employer.10615.6 Refund of tax to a new employee.10715.7 Payments by two employers in the same income tax week or month.10815.8 Change from monthly to weekly pay, etc., following change of employment .109Chapter 16 - Cessation of employment / death of an employee .11116.1 Form P45 (cessation certificate) .11116.2 Calculation of tax at date of leaving or at date of death .11316.3 Completing form P45.11416.3.1 Employment details section.11416.3.2 PAYE section .1155

Tax and Duty ManualPart 42-04-3516.3.3 USC section .11616.3.4 PRSI section.11716.3.5 LPT section .11716.4 Payments made after date of cessation and before the following 1 January .11816.5 Payments made after 31 December where the employee left before that date .11816.6 Death of an employee: arrears payments to personal representatives .11816.7 Employee retiring on a pension paid by the employer.11916.8 Employee retiring on a pension paid by the employer and dealt with under aseparate registration number or paid by a separate body (trust fund, life assurancecompany etc.) .11916.9 Employee transferred from one branch to another .12016.10 Married (non-assessable spouse) employee becoming a widow(er) / Other civilpartner becoming a surviving civil partner .120Chapter 17 - Pay Related Social Insurance (PRSI) .12117.1 PRSI .12117.2 PRSI records to be kept.121Chapter 18 - Payments to the Collector General.12218.1 Monthly remittance to Collector General.12218.2 Quarterly remittance to Collector General .12218.3 Methods of payment .12318.3.1 ROS.12318.3.2 Credit Card / Debit Card.12318.3.3 RevPay (Payments in myAccount) .12418.4 Use of form paper P30 bank giro / payslip .12418.5 Direct debit .12418.6 Negative PAYE/USC on a P30 return.12518.7 Interest on overdue payments .12518.8 Estimates by Revenue of the tax, USC, PRSI contributions and LPT payable by anemployer.12618.9 Notification to Collector General if no tax, USC, PRSI and LPT due for month orquarter.12618.10 Separate registrations: remittances .126Chapter 19 - Employers’ duties at the end of the income tax year.12719.1 End of year check list for employers.12719.2 Week 53, fortnight 27, etc. .12719.3 Completion of employees’ PAYE / PRSI / USC / LPT records .12819.4 End of year pay figures .12819.5 End of year tax and USC figures.12819.6 Errors discovered at the end of the year .12819.7 Completion of end of year returns .12919.7.1 Amended and Supplementary Forms P35 .12919.8 Important points to remember.12919.9 Dates for lodging returns .13019.10 Form P60 employee certificates .131Chapter 20 - Revenue Online Service (ROS) .13320.1 Revenue Online service .13320.2 What are the benefits of using ROS? .13320.3 Other features included on ROS .1346