Enhanced Reporting Requirements (ERR) for Payroll
The Finance Act 2022 introduced a requirement for employers to report details of certain payments made to employees and directors from 1 January 2024, subject to a Commencement Order.
From that date, if an employer makes any of the payments listed below, to its employees and directors, then they must submit the details to Revenue on or before the payment date to the employee.
There are three categories being introduced in 2024:
Travel and subsistence
Remote Working Daily allowance
Small benefit exemption
These measures are part of a phased introduction of additional reporting requirements for employers.
Travel and subsistence
Employers must submit the following list of travel and subsistence items and report the date paid and amount of each payment for:
Travel vouched and unvouched (for unvouched, civil service rates are the maximum that can be applied)
Subsistence vouched and unvouched (for unvouched, civil service rates are the maximum that can be applied)
Site based employees (including country money)
Emergency travel
Eating on site
There is no change to the current application rules for these benefits. However, these payments must now be reported to Revenue. Before making any tax-free payment, employers must still determine whether or not the payment is taxable. If it is taxable, report and pay through payroll. There is no requirement to report details of an employee’s use of company fuel cards or credit cards at present.
Remote working allowance
Employees who work remotely can be paid an allowance of up to €3.20 per day tax free. This is to cover the additional costs of working from home, such as broadband, electricity and heat. The allowance can only be paid for the actual days spent working from home. If an allowance over €3.20 per day is paid to employees, then this becomes a taxable benefit and any amount over the allowed €3.20 per day should be processed through payroll. Employers must report the total number of days paid, the amount and the date it has been paid to the employee.
Small benefit exemption
Employers can give employees up to two small benefits, tax free, each year. These benefits must not be in cash and the combined value of the two benefits cannot exceed €1,000.
If more than two benefits are given in a year, only the first two may qualify for tax free status. Unused allowance amounts cannot be carried over.
Tax-free vouchers or benefits can be used only to purchase goods or services. They cannot be redeemed for cash.
Each time a voucher is issued to an employee, employers must report the benefit to Revenue on or before the voucher is issued to the employee.
Submitting payment details to Revenue
ROS will provide the option to manually submit the ERR information each time you make a payment to employees. There will be an option for bulk upload of multiple expenses being paid at the same time through an XML or JSON file only.
If you currently use an expense software system for expenses, please contact your provider to confirm if there will be an option to upload to Revenue from that system directly.
If you currently process your expenses through payroll, then your payroll provider may be able to provide an option to upload directly to Revenue when expenses are being paid.
The ERR submission will be separate to the current payroll submission that is reported each time your employees are paid. It doesn’t matter when the employee incurred the expense, it must be reported when the employee is being reimbursed for the expense incurred.
There will be penalties for non-compliance. These are currently being drafted and will be advised by Revenue at a later date.
How can an employer prepare for Enhanced Reporting Requirements?
Review how information is currently gathered and maintained in your business.
Identify who will be responsible for the reporting- what personnel and departments will be involved to ensure accurate and on-time reporting.
Will your current expense software system, if using one, have an option to report directly from that system or will there be an option to report and pay expenses through your payroll software?
Consider current practices and do these need to change ahead of implementation? For example, if currently paying on an ad hoc basis do you need to move to a more structured process to reduce the administrative burden?
Employees will have visibility through their MyAccount to view the expenses and benefits submitted by their employer. Employers should communicate to their employees ahead of 1st January what they will be reporting to Revenue.
If you have any queries in relation to ERR please contact Nicola Tyndall in our Payroll team.