PAYROLL + THE NEW ERR PROCESS! – WHAT DOES IT ALL MEAN ?

On the 1st January 2024, there was an additional change to the process of managing payroll for an
Employer – the introduction of the Enhanced Reporting Requirements (ERR) !
Essentially it requires Employers NOT only
1) to process and submit payroll information for their employees to Revenue in the normal way,
BUT also
2) to collect, record and then submit a separate submission (alongside the payroll) of certain non
taxable expenses that are paid on behalf of, or reimbursed to, employees e.g. travel,
subsistence, site allowances and staff gifts etc
NB – Always remember though, that taxable expenses and benefits are always required to be
included in payroll !

WHAT IS THE ERR PROCESS ALL ABOUT ?

Initially the process is an information gathering process for Revenue, so that they can have better
visibility of the travel, subsistence, site expenses, and also staff gifts and vouchers etc being paid for
by Employers.

The ERR requirements relate only to ‘non taxable’ expenses, but no doubt there is also an element
of ensuring that potentially ‘taxable’ expenses are NOT being paid without the relevant tax being paid
on them e.g. small benefit expenses that exceed the thresholds etc.

These details of these expenses need to be collected, recorded and reported at the same time AND
in the same way as for payroll and also need to be included in respect of the actual payment date !
So all Employers now have TWO submissions that require to be made to Revenue on each payroll
processing date i.e. the payroll submission (as normal) AND the ERR submission with any tax free
expenses !

If, as an Employer you now decide NOT to pay or reimburse any expenses to your director(s) or
employees, then the employee can submit their business related expenses as a claim to their local
Revenue office !

WHAT ARE THE EXPENSES THAT NEED TO BE REPORTED ON AS PART OF THE ERR
REQUIREMENTS ?

Under Revenue’s regulations, there are three different categories of expense that an Employer now
needs to collect and retain information on each week/month going forward in order to comply i.e.

1. Travel and Subsistence expenses
   This involves ALL travel and subsistence expenses that are paid to or on behalf of an employee,
   whether

• ‘vouched’ expenses (with receipts and supporting documents) or
• ‘unvouched’ expenses (with NO receipts or supporting documents), or
• related to a director (employee) or a general employee
  Examples include covering the cost of flights, taxies, public transport, emergency travel as well as
  the reimbursement of employee expenses such as mileage, food costs etc. It also clearly relates
  to ‘site based’ employees who may receive a standard day rate etc.

1. Small Benefit Expenses
   These are the tax free benefits that an Employer can provide to their employees i.e. up to TWO
   benefits per year and/or up to a total amount of €1,000 per annum.
   Examples of such small benefit expenses would include easter eggs provided to staff, a Xmas gift
   or a Summer gift/voucher. If all three were provided to staff, then these would count as THREE
   small benefits and if provided in that order, then the Summer voucher would become ‘taxable’
   and require to be included in the payroll itself !
2. Remote Working Daily Allowance
   These are expenses that can be paid to remote based employees, of which up to €3.20 is tax
   free.
   Typically the costs being paid are light, heat, telephone and broadband.

WHAT NEEDS TO BE REPORTED TO REVENUE (AND WHEN) ?

Where there is a payment being made to an employee that is NOT tax free, then this (has) and will
always require to be processed through payroll !

However NOW with the introduction of the Enhanced Reporting Requirements (ERR), where there
is a payment being made to an employee that IS tax free, then this will need to be through the
separate ERR process.

Generally your payroll software will have been updated to enable reporting and submission of ERR
data to Revenue, and these ERR related expenses will now be reflected on each employee’s payslip.
However as these are ‘non taxable’, they will NOT impact the PAYE, PRSI or USC on that
employee’s earnings that payroll period.

The information that needs to be reported as part of the ERR is as follows:

1) name of each Employee
2) the amount of each payment
3) the date of each payment and/or
4) the number of days (for remote allowance), the payment date and amount
A separate ERR report will also be generated with the details of the expenses by employee in addition
to the normal payroll reports after each submission to Revenue (see below).

CALL TO ACTION AND NEXT STEPS

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