Sweeping changes to how PRSI and other taxes are reported to revenue are being introduced next January. Revenue officials attended the Wexford IFA executive this week to explain the new system and its implications.

Most farms do not have a full-time PAYE employee, but with up to half of Ireland’s farmers working off farm – not to mention farm family members, spouses, siblings and children – the changes for PAYE employees are also important.

Who is affected?

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  • Any farmer who has one or more employees.
  • Any farmer who directly employs casual labour (as opposed to hiring labour through an agency such as Farm Relief Services).
  • Any farmer who pays a family member for working on the farm, be it full-time or occasionally.
  • Any farmer whose farm is in a limited company who pays themselves a wage.

    • The big change

    While many farms have no permanent employee, most farms make payments through PAYE. As a simple rule of thumb, if you or your accountant has filed a P35 in recent years, this affects you.

    Until now, reporting of payments to employees to Revenue was made after the fact. It could be done as seldom as once a year, through the P35, which was typically due each February for the previous year.

    Now, Revenue must be informed of every payment made to every employee, in advance.

    The old tax deduction card will be scrapped. In its place will be a revenue payroll notification (RPN) for each employee. Prior to making a payment to an employee, you must request the up-to-date RPN. This will inform the employer as to how much PRSI, universal social charge (USC), and local property tax to apply.

    Are there advantages?

    Revenue points out that the new system will mean an employee’s tax credits are always up to date. This will ensure the correct rate of tax is paid and that credits are used in an optimum way, which will be of benefit to workers. Prior clearance of all payments will also ensure that employers are always maintaining their responsibilities properly.

    It is also true that PAYE workers who have more than one employer will not have to split their tax credits in an arbitrary way. For instance, a student who works during holidays on the family farm and also has an off-farm part-time job will benefit. Payment due dates for PRSI, USC and LPT do not have to change – it is the reporting that will be different.

    Finally, there will no longer be a requirement to return P35s, P45s or other such documents. The new system supersedes these documents.

    Reaction

  • At Monday’s IFA executive, farmers felt that the new system will prove rather complicated for small businesses with only one or two employees, and particularly where casual and farm labour is used on an occasional basis. The potential costs imposed were pointed out.
  • “Most farmers are registered with the Revenue Online Service (ROS), but are registered through their accountant,” said one farmer. “This is going to cost hundreds extra each year.” Another pointed out that the lack of effective rural broadband will leave many farmers unable to utilise the online reporting system.
  • There was a proposal that the IFA engages in negotiations with the likes of ifac to determine an affordable fixed cost for carrying out the work.

    • Campaign

    The Revenue Commissioners will have a strong presence at the National Ploughing Championships in Tullamore. They will also be running seminars in every county. Keep an eye out in local publications or contact Revenue to attend one of these events.