Enhanced Reporting Requirements – Ten Tips

Enhanced Reporting Requirements [ERR] is almost upon us. We are going to give our top ten tips to help you cut through the jargon. Some of the tips need action before the end of this year. Our ERR 10 tips will focus on

• What is ERR
• When is it coming in
• What you have to report
• Remote working daily allowance
• Small Benefit Exemption
• Travel & Subsistence Payments
• Report Timings
• How to report
• Examples
• Take action

What is ERR

Enhanced Reporting Requirements impose an obligation on all employers to report certain benefits. These reportable benefits are ones that employers make to employees without deducting tax. The reportable benefits included under the new ERR regime are

1. The remote working daily allowance of €3.20
2. The payment of travel and subsistence expenses, and
3. The small benefit exemption

When is it coming in?

It is coming in on the 1st of January 2024. While the law is there, it is subject to a commencement order that a Minister must sign, but hasn’t signed yet!

What you have to report

You have to report the non-taxable expenses, mentioned above, that you pay to employees . These are

Remote Working Daily Allowance

This is where an employee works from home and their employer pays them an allowance for this. The rate is up to €3.20 for each day worked from home. The payment is not subject to tax provided certain conditions are met. The reportable details are

• Total number of remote working days
• Amount paid, and
• Date paid to the employee/director

Travel & Subsistence Payments

An employer can reimburse an employee or office holder travel and subsistence payments. This applies in the case where the employee incurs such expenses as part of their work. Subject to certain conditions the employer can pay these expenses tax-free. The reportable details are

• Travel vouched
• Travel unvouched
• Subsistence vouched
• Subsistence unvouched
• Site-based employees including country money
• Emergency travel, and
• Eating on site

Small benefit exemption

An employer can give an employee a voucher or other non-cash benefit up to a value of €1,000 in a tax year. The small benefit exemption applies to up to 2 vouchers or 2 benefits of a combined value of no more than €1,000. So, the first two vouchers or benefits are tax-free and the third is taxable irrespective of the value.

• Value of the benefit and
• Date granted to the employee/director.

Report Timings

The employer must notify Revenue on or before providing any of the three reportable payments. As such, employers must satisfy themselves that they can make the payments tax-free. The employer will need to hold all the details of the non-taxable payments to the employees. There is no need for the employer to provide Revenue with the backup. But they will need to keep the backup in the event of a Revenue review.

How to Report

There are 3 ways to report the required payments.

1. Direct reporting software packages
2. ROS file upload
3. ROS online form

Software packages

We use Collsoft for our payroll clients and our payroll specialist Izabela loves it. They will provide a software solution to help you meet your enhanced reporting requirements. Remember ERR is a separate reporting requirement to payroll. The expectation is that you will report the 3 non-taxable benefits at the same time as the payroll.

ROS File upload

Another option is for employers to input the necessary information into a file and upload that to ROS. There is a need for a certain file type and what Revenue mention in their guidance is a JSON or .xml format. Per the guidance, employers will be able to create these file types using Excel macros. Not sure about that one!

ROS Online Form

Employers can input the required information directly on ROS, on the relevant screens. The screens will have time saving features such as saving employee details. This will make the submission of future non-taxable expenses a lot easier.

Examples

We’ll look at an example in each category of non-taxable payment reportable benefit.

Remote Working Daily Allowance [RWDA]

Brenda’s employer has a hybrid working arrangement. They work 2 days in the office and 3 days at home every week. Brenda gets paid monthly on the 26th of the month. In January 2024 Brenda works 12 days from home. Her RWDA for January is €38.40.

As Brenda receives the payment on the 26th of January, the employer must report the payment on or before that date. They must report the payment date, the amount of RWDA, and the number of days.

Small Benefit Exemption

Tom’s employer Sound Lads Ltd gives Tom two vouchers each year. One for €500 in July when Tom takes holidays and another €500 at Christmas time. Billy, the owner of the company, decides to give everyone an Easter Egg in April 2024. It’s a nice touch and sure who doesn’t love some chocolate. The easter egg costs €10.

As the easter egg is a small benefit, per Revenue guidance, Sound Lads Ltd must report that as a benefit. That is the first benefit Tom gets in 2024. When Tom gets the second benefit, the voucher in July,  his employer must report that. The third benefit, being the December voucher, won’t qualify for the small benefit exemption.

Only the first two benefits qualify. The value of the voucher in December will have to go through payroll and be subject to PAYE, PRSI, and USC. So, a tax bill for Tom of up to €260 in December. If he didn’t get the easter egg the voucher in December would be tax-free. Expensive chocolate! Sound Lads Ltd reports the first two benefits but doesn’t report the December benefit.

Travel & Subsistence

Karl is a van driver for a car parts distribution business. The company provides the van and pays for the fuel with a fuel card. Karl’s employer pays him a daily subsistence rate of €16.29 in line with the civil service rate. They pay Karl every two weeks and pay Karl his expenses of €162.90 on the Thursday of the second week.

Karl’s employer must provide Revenue with the details in an ERR submission on or before the Thursday payment day. The correct subcategory is “subsistence unvouched.” They must include the payment amount and the date paid.

Take Action

The time to act is now. Is your payroll provider providing an ERR reporting function with their payroll package? Is your payroll operator familiar with what they have to report and when? As an employer are the tax-free payments you make to employees in line with Revenue guidance?

There’s no doubt where you have employees on the road or on sites that it makes sense to review the payments. If you are paying an employee too much subsistence should some of it go through payroll? In that case, your employee will get less pay each week. That can lead to HR or Union issues, or both.

You’ll see how crazy the small benefit example with the Easter Eggs is. Revenue published an FAQ guide on the new ERR system and under small benefits, they have a question.

Would the following be considered a small benefit?

1. Gifts made to the children of employees.
2. Gifts for the birth of a child, or a marriage, or a special occasion
3. A long-term service award such as a watch
4. A gift on retirement
5. Flowers
6. Wine

You can see how pernickety and anal Revenue are getting here which is very disappointing. Should we add toilet roll or biscuits and milk to the list? The cute thing is they ask the question but don’t give the answer. But there is a line from them that goes.

“In all of these scenarios mentioned above, it is possible, depending on the underlying circumstances that they are considered to be a small benefit”

This is all getting a bit pathetic. If you can use an example of an easter egg as a benefit, then you can see where Revenue are going with this.

We would hope Revenue will work with employers in the teething stages early next year. There’s no doubt they are getting more and more information. It pays to have a quality payroll function as this protects you and your employees. After all, they are your main asset, and you need to look after them.

Is payroll becoming too much for you and you need help? If so, start here