PAYE Modernisation – Part 1

Everything Changes and Stays the Same

It’s getting to that special time of year again, when everything starts to wind down (or ramp up for those in retail businesses of course), the evenings get darker and darker and the early birds begin putting up twinkling lights much to the chagrin of the late starters. It is also that time of year when thoughts begin to turn inwards and you may be reminiscing about the year 2018 and whether it has been a successful or turbulent year for your business. It is important at this time of year, to take time to focus on the year ahead and make plans for the future. As such, Revenue have released an end of year notice for employers, and we thought this would be the perfect time to take you through the main points. This week we will focus on the first half of the notice, with next week’s post detailing the second half.

2018 Employer Tax Credit Certificates:

Revenue have stated in their brief that they would cease issuing 2018 P2Cs as of November 30th, with the exception only of those employees commencing employment notifying Revenue in December, these will continue to be issued until the end of the year.

PAYE Modernisation:

This will come as no surprise to our regular readers as we have focused quite heavily on this of late, but this long discussed and well overdue change will be introduced on January 1st 2019. The old PAYE system will be changed to a real time system. In advance of this it is imperative that you ensure all employees are registered with Revenue, and that all of your employment and payroll data is correct and up to date. This will ensure a smoother transition into the new system.

It is also advised that if you currently utilise payroll software, to contact your provider to ensure that you are set up for the new system.

Similarly, if you use the services of an accountant for your payroll, it is advised to contact them and ensure that all is in order for the changes ahead.

ROS Digital Certificates:

As we have previously discussed, all Revenue operations will be moving to the online system, it is crucial that you should review your digital certificates and ensure that they have not expired to avoid any delays to your services as these certs must be renewed every 2 years. Ensure that your contact details are up to date so you do not miss any important reminders.

P2Cs:

As discussed above, Revenue will be discontinuing the practise of issuing these, instead you will utilise your payroll software or input Revenue Payroll Notifications (RPNs) onto the ROS system yourself. This system will provide you with all information required to process taxes etc. and will be available from December 5th.

Forms:

As we have discussed previously in relation to PAYE modernisation, forms such as the P45, P46, P30, P35 and P60 are to be abolished in favour of real time reporting.

Further information on how to prepare for the coming year is available on the Revenue website. Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Changes to Tax Allowances

Squeezing the Squeezed

There were some financially negative headlines this week, with publications announcing that many thousands of Irish workers now find themselves in the firing line for an apparent “tax grab” which would affect some of the lower paid PAYE workers in our country, ranging from employees of the hospitality sector (who already find themselves in hot water following the changing of their VAT regulations in this year’s Budget announcement) to construction workers and teachers.

Reports suggest that the Revenue Commissioners find themselves under fire for this apparent attack on our lower paid workers as it moves to take annual tax allowances away from these people from January 1st. This comes on the back of the Finance Minister being accused of not doing enough to protect the “squeezed middle” during the Budget announcements, and adds fuel to the fire of the public belief that the Government seeks to protect only the very wealthy in society.

As we have discussed in the past, the Revenue system has been undergoing a major overhaul in recent months, with a clamp down on tax fraud and evasion as well as changes to the online services and a general overhaul of Irish tax affairs. As a result of this, and following on from the taxation changes to be made in the hospitality sector, it is now reported that Revenue are beginning to look closely at other sectors to review the current flat-rate tax scheme.

This scheme is intended to cover some costs for workers such as tools and uniforms etc. By reducing the portion of income that a worker is required to pay tax on, this is intended to allow these costs to be covered without interfering directly with the worker’s take home pay. It is estimated that over 500,000 Irish PAYE workers currently avail of this scheme. Teachers and construction workers could find themselves the hardest hit by this change.

As of right now, there is no concrete information on these changes, and it will doubtless be ill-timed as it will eliminate any gains felt by the Budget for many employees. The only word from the Revenue Commissioners at present is that all allowances paid to all categories of staff who are eligible to claim tax relied will be examined as the review continues.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

*Note: Since time of writing, new information has surfaced, suggesting that the Government may delay the implementation of the below until 2020, we will give more information on this when confirmed

Where to now for Brexit?

The Swings and Roundabouts

After a period of relative silence on the topic, Brexit has quickly become a hot conversation topic once more in recent weeks as Brexit talks begin to ramp up. Despite the constant chatter, however, there have been no official announcements or updates on what we can expect from a final Brexit decision. Naturally, this has caused an atmosphere of concern and uncertainty, particularly for our own minute island as questions about border issues, and difficulties in trade swarm around us and we remain uncertain about our place in all of this. As we have discussed recently however, many Irish companies appear to be thriving in this uncertainty and beginning the process of protecting their business against any potential fallout. Something we have learned from this continued confusion is that Irish companies show great resilience in the face of adversity and have attempted to learn the lessons enforced by the economic downturn.

Recently, there have been growing concerns about the impact Brexit could have on our already troubled housing sector. We have spoken at length in the past about the housing sector as rents continue to rise and many are being elbowed out of any attempts at gaining a foothold on the property ladder. It was announced this week that the Economic, Social and Research Institute (ESRI) believe that the country should make itself ready for Brexit to have an effect on housing, as they expect private sector construction to drop, encouraging the Government to invest more in social housing. It is also believed that rent increases will continue to spiral, leaving many more families in need of support. As well as the ESRI, the Nevin Economic Research Institute feels that housing issues will fluctuate massively following Brexit and that demand will reach an all-time high. It was reported this week that both bodies will present TDs with their findings on November 20th.

Head of Economics with the ESRI, Kieran McQuinn has stated that the Housing Assistance Payment may become the main income support for private renters in the wake of Brexit:

“If income and employment growth are slower than anticipated due to Brexit, the numbers of families that qualify for HAP over the coming years will likely be higher than currently expected,”

Mr McQuinn also believes that demand may decrease but that this may not have the expected positive implications. Meanwhile, the ERSI have highlighted that mortgage arrears remain an issue in Ireland, and that following Brexit, these arrears may continue to increase.

There is some mild good news on the horizon for prospective buyers, however as Mr McQuinn of ERSI has stated that Brexit may have the effect of slowing the increase of mortgage interests rates, which would in turn finally see some levels of affordability return to the Irish housing market.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

PAYE System Change

A Change is as Good as a Rest

We recently spoke briefly about the changes to our PAYE (Pay as you Earn) system here in Ireland, aptly called ‘PAYE Modernisation’ which will come into effect on January 1st 2019. Today we would like to go into a bit more depth on the topic and ensure that all of our colleagues, clients and friends are aware of what these changes will mean for them as well as to ensure that all are prepared for this fast-approaching change.

The PAYE system in Ireland is long overdue a significant update, and these changes are set to be of benefit to both employers and employees.

Employers:

For employers, these changes will be of benefit as they will seek to streamline the way in which employers report payroll information to Revenue. Files will be submitted electronically for each employee for every payment period. It is hoped that the employers workload will not be increased with this change, and it is anticipated that these reports will be fully integrated into payroll software, allowing for a smoother transition for employers.

Employers will also be able to input the details of a new employee before their employment has begun, which it is hoped will reduce the frequency of issues arising with over or under payment of tax.

Employees:

Perhaps the most prevalent change that will be in place for employees is that the P60, P30, P35 and P45 will be entirely abolished. Instead, employees will have full access to their pay and tax record online. It is anticipated that this will be updated consistently as the employee is paid, and will allow Revenue to conduct reviews to figure out if employees are utilising their tax credits to the maximum effect. This will also allow employees to adjust their tax credit and Standard Rate Cut off Point digitally, and they may be prompted to do so if Revenue identify that they are not being used to the full effect. This will create an easier system for the employee as they will no longer be required to wait until the end of the tax year to assess over or under payment.

As with all important changes, we would advise to do your research, fully read the Revenue Brief “PAYE Modernisation, Are you Ready” and ensure that your company and employees are fully registered and that all the required forms are issued at year end. This will ensure that you start the year off on the most secure footing possible ahead of these changes.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Corporation Tax Statement of Particulars – Section 882 TCA 1997

Allow us to be Brief

Here at EcovisDCA it is always our top priority to ensure that our clients and friends are kept fully up to date on any and all issues that could be pertinent to the continued success of their thriving businesses. Today we will be focusing on a new update issued from Revenue which may have an effect on the registration status of some companies. On October 11th 2018, Revenue released a brief entitled “Corporation Tax Statement of Particulars – Section 882 TCA 1997”. The title isn’t exactly snappy or self-explanatory so we thought we would break down the details for you so that you can be fully informed.

As you are all aware, it is essential for all companies to register with the CRO (Companies Registration Office) this should be done immediately upon commencing trade operations. However, there are two other times that registration must take place which may be overlooked:

  • When a pertinent or material change in company details has occurred.
  • When issued with a notice to do so from a Revenue Inspector.

Therefore, it can be just as important to keep an accurate record of your business status with Revenue as it is to take that initial registration step. As these two conditions can sometimes be missed, issues have arisen which have required Revenue to issue notices. These notices concern companies who registered in 2017 but have yet to register their trading status with Revenue. It is essential that a reply is issued to this notice should you receive one, in order to provide an accurate update of your company’s status.

Should your company have begun trading, a tax registration will be required, as well as a notification of commencement. Details can be found on the Revenue website of what else may be required should trading have commenced.

Revenue also require a reply within 30 days detailing the company’s status in the event of any of the following:

  • The Company does not intend to trade.
  • The Company has not yet commenced trading but intends to do so.
  • The Company is non-resident by virtue of a Double Taxation Agreement.

This can all be done using the Revenue online services, which have vastly improved the usability and user-friendly status of dealing with these matters. As always, should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

VAT Increases for the Hospitality Sector

Room with a View?

As discussed in last week’s Budget post, Budget 2019 snuck up almost unannounced and whilst it did not seem like much of a big news day for many, there were some who were hit by an utterly unexpected blow that could have far reaching consequences for many Irish business, particularly in the uncertain atmosphere surrounding Brexit.

One of the hardest hit sectors in this Budget, and the first to speak out against it is the tourism sector. It goes without saying that Ireland thrives massively on our culture of tourism and being the well-known “land of a thousand welcomes” so in the current uncertain Brexit climate it has come as quite a shock to this sector to receive the cutting blow of the removal of their special 9% VAT rate, to be replaced with the standard 13.5% rate going forward. It is estimated that this will cost the sector up to €500million a year, and that this is where the funds have been accessed to make the rest of the Budget’s announcements possible.

The idea for the removal of this rate was originally floated by Finance Minister Paschal Donohoe ahead of Budget 2018, but with Brexit looming this did not come to pass. The change comes following last July’s critical Department of Finance report which heavily suggested the special rate be scrapped, believing it to have served its purpose and to no longer be worth the cost to The State. In hindsight, glancing at the report now, the writing has been on the wall for this change for some time. Unfortunately for our tourism and hospitality sector, this does not make the pill any easier to swallow.

One of the most severe problems with this change is that Dublin has already been experiencing soaring hotel room rates in recent months. Chief Executive of the Irish Hotels Federation Tim Fenn has said that there has been widespread shock among the hotel industry.

“While we recognise that there was a need to raise revenue, in doing so it was incumbent on the Government to nurture growth in the economy. Tourism is growing. It is giving over €2billion a year to the Exchequer. 9% VAT was about the right rate, it brought us into line with our competitors in Europe, now 26 countries in Europe have a lower VAT rate. We are expected to compete with that”.

It remains to be seen what lasting effects this change will have on Ireland’s vital tourism sector and we hope that our clients and friends in this sector will find themselves weathering the storm to come out on the other side stronger.

As always, should you require any help or guidance on any financial or business matters, please don’t hesitate to contact us here at Ecovis DCA, where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Significant PAYE Changes Coming

Rolling with the Changes.

Following on from our recent series on modernisation, today we will be discussing some more imminent changes which are set to change the face of payroll as we know it. As you will all be aware, we here at EcovisDCA have long been great supporters of Irish SMEs (Small and Medium Enterprises). As we have discussed in the past, SMEs now make up over half of all Irish businesses, so to say they now form the backbone of Irish business is no exaggeration. In the past we have spoken at length about new methods of funding available to these vital businesses as we continue to support their survival. This week we have decided to take a look at one major upcoming change which could have a large impact on SMEs and which they may need to begin planning for as soon as possible.

This year it was announced that the PAYE (Pay as You Earn) system would undergo what is likely the largest overhaul the system has experienced since it was introduced in 1960. These changes will have wide ranging effects on all businesses. Having remained largely unchanged for decades, the system is naturally due a major changes and such a large change could of course have detrimental effects on any smaller businesses who may not be as prepared as they could be. These changes are due to come into effect in January, so time is running out to get fully prepared. It is intended that these changes make the payroll process an easier task going forward as well as allowing any issues to be resolved more efficiently.

A survey commissioned recently by payroll software providers Big Red Cloud has discovered the worrying fact that a large number of SMEs do not feel prepared for these imminent changes. While many firms reported that they feel there isn’t enough clear information to hand, as many as 40% feel that they are unprepared and short on detail of how the changes will work in practise.

Rather than payroll information being logged yearly via a form, many of our current ‘P’ forms will become outdates, with data being instead inputted on a regular basis. This new system will require an update of company payroll software, with companies employing less than 9 people qualifying for free software. This is a major shift towards real-time electronic logging of data which will remove the need for the classic forms.

Big Red Cloud CEO Marc O’Dwyer has said of the company’s findings:

“As the year progresses, it is becoming increasingly apparent to us that, not only are many businesses not ready, many are simply unaware and/or uninformed of the changes and what they will mean for their business.”

Whilst Revenue Chairman Niall Cody has stated that the changes:

“Represent an important step in the continuous improvement in service […] businesses, particularly those at the smaller end of the scale will need some help to get there.”

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Housing Market – What’s Next?

The housing crisis in Ireland is something about which we have spoken at length in the past. Between the mortgage rules and rising cost of rent excluding many from the market and the increasing cost of buying in general, this area has become quite the minefield in recent terms for anyone who wasn’t lucky enough to secure their house before prices began to climb. This week, it was announced that house prices in certain areas had dropped slightly for the first time in an age. The fact that this led to a giant exhale of relief is quite telling of the current market, as such a small event sparks a small level of hope for those currently saving to meet the lending rules. It seems from recent reports that prospective buyers have grown tired of being excluded from the narrative.

It was reported this week following a Sunday Independent opinion poll that almost three quarters of people currently saving for a mortgage believe the Central Banks mortgage lending rules to be incredibly unfair. This is a marked rise of 19% from last year’s findings and shows an atmosphere of dissatisfaction with the status quo in the housing market. It was also found that as few as 5% of those saving feel that the lending rules are fair. The study also found that more people are now saving for a mortgage than last year. Almost half of those surveyed stated that they didn’t feel the banks are doing enough to assist people in gaining a mortgage.

There was also a fairly strong belief revealed through this study that the housing market may be headed for another crash in the coming years with over half of those currently saving believing that this will be the future for the Irish housing market. This believe naturally creates discord among savers about whether or not now is a good time to buy, with 43% believing that now is the right time to buy, and 39% believing that now is not the right time to purchase a house. As you can see there is not much between the two camps given their utterly opposing views. Perhaps this discord is the reason why there has been a slight drop off in house sales this year, with the CRO (Central Statistics Office) reporting that there has been a drop of almost 5% in the first half of this year outside of the Dublin area.

While nothing is certain, particularly during these uncertain times as Brexit continues to loom large above us, there are certainly signs of a downturn in the housing market in the next couple of years as many people struggle to get a foothold on the property ladder.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Budget 2019

We constantly hear about how fast Christmas comes around each year and already selection boxes are appearing in our grocery stores and social media posts are being put up about how many weeks remain until Christmas. However, does anything really come around quicker than the Government’s yearly budget? It seems like only yesterday that we were giving you the main points on last year’s budget and now here we are again to break down the key points of this year’s budget. Indeed this year’s budget seems to have entirely crept up on us all, and slid into the world without much of a fanfare. So, what does Budget 2019 have in store for us all in the coming year?

SMEs

As you are aware, we are huge supporters of Irish Small and Medium Businesses so there was some welcome news announced in the budget.

A future Growth Loan Scheme for SMEs and those in the agriculture sector will be launched.

€110million in Brexit measures will be put in place.

Taxes and Wages:

  • There will be a reduction in the third rate of Universal Social Charge (USC) from 4.75 to 4.5%
  • The second rate band threshold for USC will increase from €19,372 to €19,874
  • An increase in the tax free threshold on transfers between parents of children will take the threshold from €310,000 to €320,000.
  • Weekly threshold for higher rate of employer’s PRSI will increase from €376 to €386.
  • Minimum wage to increase to €9.80 from January 1st.
  • VAT to increase from 9 to 13.5%.
  • Self-Employed individuals will receive a further €200 to their earned income tax credit.

Housing:

This has been a hot topic this year and something that has hit the headlines on numerous occasions. What action are the government implementing?

  • There will be €2.3billion allocated to the housing programme.
  • An additional €121million will be allocated to the Housing Assistance Payment.
  • €60million allocated to funding emergency accommodation and €30million allocated to homelessness services.
  • There will be funds allocated to a ‘Serviced Sites Fund’ which will aim to have local authorities begin to provide affordable housing.
  • Mortgage interest relied to be increased to 100% for landlords.

Social:

  • All weekly social welfare payments will increase by €5 from next March.
  • Christmas bonus to be fully restored this year.
  • From November 2019 a new parental leave scheme will offer 2 extra weeks leave to all parents in the first year of the child’s life. The aim will be to increase this to 7 weeks over time to bring Ireland more in line with other European countries.

The government have come under fire for this budget as it has been suggested that it doesn’t go far enough on crucial matters from climate change to tourism and national debt. This is however the first time that we have seen the national books balanced since 2007 so it is hopefully a step in the right direction.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Cloud – How it can benefit your Business

Head in the Cloud

Today sadly brings us to the close of our mini-series of posts on digitising your business activities. We hope this series has been of benefit to you and we hope to be able to bring you more of these small segments in the future. This week our heads are well and truly still in the clouds… or THE CLOUD to be more specific, sure isn’t that where we are all looking to store our data at this point?

We have spoken recently about how a move to Cloud Computing and how this can be of benefit to your business. From ensuring higher security measures than storing files on your computer hard drive or in hard copy, to the general ease of access, there can be no doubting that Cloud Computing appears to be the way forward. Many people do pose the financial question however, will moving to The Cloud save money? The truth is that while it often does, this is not a guarantee but this should not dissuade you as the increased usability of your files will undoubtedly save you time, the second thing we often find ourselves short of.

To assist you with an easy transition to this new way of life, we have gathered the below list of considerations to take into account when creating your new Cloud Strategy:

  • Hardware investment decisions– when hardware is up for refresh it is an ideal time to look at whether you can save money/increase flexibility by moving to the cloud.
  • Connectivity – is there available bandwidth that is reliable and secure to facilitate access to cloud technologies?
  • Application suitability – are your core applications ready for a move to the cloud? Are some more suitable than others? What would your migration roadmap look like if you phase your move?
  • Public versus private cloud – the pace of technology change means that private clouds can easily become defunct or run into performance issues, it can often be as limiting as servers onsite as, you are tied to the decisions made at a moment in time. Public cloud investment from companies like Microsoft means not only migrating to the cloud, but an ongoing cycle of optimisation through advancements in the platform.
  • Core versus context – choosing to migrate to the cloud with a trusted partner means that you can have your internal staff focus on what is core to your business, rather than managing infrastructure, back-ups etc.
  • Risk management – a move to the cloud is an ideal time to review your business continuity arrangements, cloud can open up a degree of redundancy that would be impossible to achieve as a single small/medium organisation.
  • Staff productivity – desktop cloud tools afford staff a greater opportunity to collaborate, offer larger storage capacity and remove the need for inhouse management of servers.

 

We hope this has been of use to you and will assist you in creating the best digital strategy for your business. Thank you to our friends at INNOVATE for being a fountain of knowledge on this topic and for sharing this with us. Should you wish to engage their services for your own Cloud Strategy don’t hesitate to get in touch with them and as always for all other business and financial queries, our door is always open here at Ecovis DCA.