The new Enhanced Reporting Requirements (ERR) for certain non-taxable benefits are due to come into effect from 1 January 2024. Currently, employers submit details of all reckonable earnings paid to each of their employees. The ERR sees the introduction of an entirely separate submission. ERR reporting is a new obligation concerning employer returns for certain non-taxable payments of expenses and benefits to employees. This will be the case regardless of whether these payments are processed through a company’s payroll system or via an expenses protocol operated by the employer. There are 3 categories of expenses and benefits included under the ERR system as follows:
Travel and Subsistence
Tax free expense payments in this category that will require to be reported under ERR will include payments for:
- Travel - vouched and unvouched.
- Subsistence - vouched and unvouched.
- Emergency travel.
- Eating on Site.
- Site – based employees.
Payments for “Country Money”, which can be received by employees, involved in the construction and related sectors are covered within this category.
Small Benefit Exemption
Amounts paid in vouchers, subject to an annual maximum of two benefits per employee not exceeding a total of €1,000.
Remote Working Relief (daily allowance)
The number of days and the amount paid, with a payment of not more than €3.20 per day for the days an employee performs employment duties from their residence. The use of company credit cards or prepaid cards aren’t currently in the scope of ERR. Also excluded are fuel cards, toll tags, car insurance, and motor tax paid by an employer. These payments are excluded as no payment has been made directly to employees or directors by an employer.
The pressure points for employers can be categorised under 3 headings:
Systems integration issues:
Many employers do not have integrated payroll and expense systems and this could lead to practical difficulties in complying with ERR obligations on a timely basis, given the requirement to report details 'on or before' the making of a payment or reportable benefit. For travel and subsistence payments, employers may need to consider making reimbursements less frequently (perhaps monthly) to reduce the administrative burden of making multiple reports. Employees may take an adverse view of this as it will delay their reimbursement.
Timing issues for small benefits:
Given the broad nature of what can be considered for the purposes of the small benefit exemption, clear timing issues may arise with reporting, particularly where the benefit is of an ad hoc or unexpected nature.
Steps that should be taken by employers in preparation for the reporting requirements of ERR:
- Identify the system(s) used to pay expenses such as travel, subsistence, working from home and small expenses, are they paid via payroll or ad hoc payments.
- Establish whether your current payroll software can accommodate the additional reporting requirements.
- Discuss with employees any changes to the frequency of payments that may arise.
- Ensure that records are maintained of the days for which the remote working allowance is paid.
It is important to remember that from 1 January 2024, for all employers who make payments which fall under the categories outlined above, two returns will be required following each payroll run: the current and standard Payroll Submission Report and the Enhanced Report Requirements submission for any expenses paid.
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