Revenue: P60 and P45 to be replaced by online tax system changes

Employment Detail Summary to take place of old paperwork with real-time information

A Revenue spokesman said  the changes would result in ‘significant efficiencies’ in the accuracy and transparency of tax details. File photograph: Nick Bradshaw/The Irish Times

A Revenue spokesman said the changes would result in ‘significant efficiencies’ in the accuracy and transparency of tax details. File photograph: Nick Bradshaw/The Irish Times

 

The most radical overhaul of the personal tax reporting system in 60 years was outlined on Tuesday by the Revenue Commissioners.

Much of the paperwork associated with paying income tax will disappear with the P45 and P60 being replaced by a more comprehensive and real-time financial summary of employment.

An Employment Detail Summary will take the place of the old paperwork as the definitive recap of taxes paid as part of an effort to modernise the system from next month.

The overhaul is part of what a Revenue spokesman described as the “most significant reform of the Pay As You Earn (PAYE) system since it was first introduced in 1960”.

The roll out of the changes began in 2017 and employers and pension providers have been reporting details of employees’ and pension recipients’ pay and statutory deductions to Revenue each time they are paid since the beginning of last year.

The Revenue spokesman said the change would result in “significant efficiencies and improvements in the accuracy and transparency of tax details for around 200,000 employers and pension providers, as well as 2.6 million employees and pension recipients and Revenue”.

Online services

The reform of the PAYE system, and in particular the receipt of real-time payroll information, has allowed Revenue to provide extended online services to PAYE taxpayers through its MyAccount service.

Generally, prior to the start of every tax year, Revenue has issued Tax Credit Certificates (TCC) to employees and pension recipients whose tax credits and/or rate bands are changing for the next tax year.

Revenue is currently issuing Tax Credit Certificates for 2020 to all employees and pension recipients. All told, 2.7 million of these certificates are being issued and will contain information explaining how the P60 is being replaced by the Employment Detail Summary for the 2019 tax year onwards.

Some 1.2 million employees registered for MyAccount, and who have opted to receive correspondence electronically, will receive email notifications to say their certificate for next year will be available to view through the online portal.

Employees not registered for MyAccount, or who are registered for MyAccount and have elected to receive correspondence in paper, will receive their 2020 certificate in the post.

Deductions

Employers and pension providers have been sending Revenue details of pay, tax and other statutory deductions for each employee or pension recipient every time they get paid since last January. This means that employers will not be issuing a Form P60 at the end of the year and Revenue will instead provide employees with an Employment Detail Summary.

This summary will be available through the MyAccount portal from January and will contain the employee’s income and deduction details for 2019, as reported to Revenue by their employer.

The information can be used in the same manner as the Form P60, for example, as proof of income to a third party.