Signed into law in December 2022, the Finance Act 2022 has changed the requirements governing the reporting of expenses to Revenue. Under a new system referred to as Enhanced Reporting Requirements (ERR), companies will now be required to report any “reportable benefits” paid to employees and/or directors. These are benefits which are not currently subject to tax under the PAYE system and are the following:
- The remote working daily allowance of €3.20
- The payment of travel and subsistence expenses
- The small benefit exemption
Anyone wishing to examine these changes themselves should consult Section 897C of the Finance Act. However, here we will provide an overview of these changes, the system for reporting these expenses, and advice on how to prepare. The new ERR regime will come into force on January 1st 2024, so it is important that companies prepare for this deadline.
Employers are already obliged to submit payroll details to Revenue for each individual and director in their employment. These details include pay, tax, USC and PRSI deductions, as well as taxable benefits, pension contributions and redundancy payments. This data is provided to Revenue through the Revenue Online Service (ROS) and it is anticipated that the new ERR system will operate in a similar manner.
What information will ERR require?
Compliance with the “reportable benefits” system will involve sending on employee-related information such as the employee’s name, address, DOB, PPSN, staff number, and employment ID. Additionally, the payment date, value, and category will all be included. However, the three categories of expense all have slightly different requirements, which can be broken down as follows:
Travel & Subsistence: this covers payments an employer makes to an employee/director regarding travel or subsistence incurred by the employee, where no tax is deducted. When submitting a report to Revenue, the amount and date paid should be provided for each of the following categories:
- Travel Vouched
- Travel Unvouched
- Subsistence Vouched
- Subsistence Unvouched
- Eating on site
- Site based employees (includes “Country Money”)
- Emergency Travel
Small Benefit: this covers any tax-free benefits that an employee/director may be provided by their employer. These can include vouchers but extends to many kinds of benefits. When making these payments, the employer should ensure the payment conforms to the standards set out in Section 112B of the Taxes Consolidation Act 1997.
Notable conditions here are that the voucher or benefit cannot exceed €1000 in value and only two vouchers or benefits may be given in any one tax year (it should be noted that these conditions have also only been in effect as a result of the Finance Act 2022; previous limits were €500 in value and only one voucher per year).
Employers will be required to report the following:
- Date provided
Remote working daily allowance: this covers any payment an employee/director may receive from their employer which relates to days the employee worked from home. These payments can come to no more than €3.20 per day. Employers will now be expected to report:
- Number of days
- Amount paid
- Date paid
Compliance – what might you need to do?
With these new regulations coming into effect from January 2024, the window for updating systems is already closing fast. Revenue have indicated that guidelines will be forthcoming while they are also currently holding information sessions. For the moment, however, employers may wish to consider the following:
- Develop your organisation’s awareness of where responsibilities will lie for complying with the new regulations. Conduct information and awareness campaigns targeting key stakeholders.
- Examine how your organization currently collects information related to the reportable benefits. In particular, be aware that new systems may be required, particularly if information is kept in a manual format.
- Evaluate the different types of employee expenses your organization currently makes and update the language used, where necessary, to bring your own records of these expenses in line with the ERR categories
- Assess the current timeframes covering expenses payments and whether these will need to be changed to facilitate ERR.
If you have any queries about ERR, please contact Carol Hartnett, Manager in our Accounting & Financial Advisory Department.