Revenue’s PAYE changes will see end of P60

Revenue has outlined what it has described as the most significant changes to the tax system since 1960 when PAYE was introduced.

The changes are intended to make tax matters easier for the general public by removing much of the paperwork that normally goes in tandem with paying tax.

The new system will result in the removal of the P45 and P60 systems in the coming weeks and their replacement with a “real time, comprehensive financial summary” of a person’s employment history.

Revenue said the new system will result in significant benefits to the public.

These benefits include greater transparency about the taxes people are paying through their salary, greater transparency to ensure employers are paying the taxes they should and improved access to tax rebates and medical refund claims during the year.

The P60 – a certificate detailing total pay and deductions including PAYE, PRSI and the Universal Social Charge – is being replaced by an Employment Detail Summary.

In preparation for the changes, employers have been providing reports on a worker’s income and statutory reductions to Revenue every time they get paid so they have been building up a real time update of taxes paid.

By registering for and using the MyAccount option on the Revenue website, PAYE workers can view their deductions as they happen.

They can also make claims for tax refunds, for which there is a four year time limit.

Over 181,600 employers made 6.1 million payroll submissions, reporting gross pay and pensions of over €98 billion in 2019, Revenue said today.

The total Income Tax, USC and PRSI paid to the Exchequer for 2019 was €31.6 billion.

Ruth Kennedy, Revenue’s Project Manager for PAYE Modernisation, said the scrapping of the P60 is the biggest change to the “pay as you earn” system since the 1960s.

Ms Kennedy said the changes will ensure people pay the right tax at the right time and get the full benefit of their entitlements throughout the year.

She also said the changes to the system means that people will be less likely to pay emergency tax if they change job, because employers will be able to access real time tax credits.

The changes will not be more expensive for employers and 89% of surveyed employers said that the new measures make it easier for them, Ms Kennedy added.

Announcing headline results today, Revenue said it collected total net receipts of €73.9 billion in 2019.

This included €58.4 billion in taxes and duties for the Exchequer and €15.5 billion on behalf of other departments, agencies and EU member states.