As an accountant, a vital part of your job is to keep up with ever-changing rules and regulations. One change coming in 2024, is Revenue's Enhanced Reporting Requirements (ERR). From the 1st of January 2024, employers will be required to report specific non-taxable payments made to employees to Revenue. If you have payroll clients who will reimburse employee expenses through the payroll from January 2024 onwards, they may expect that you will be taking on this new requirement. Even if they plan on reimbursing expenses through other methods, they may require assistance with reporting this information to Revenue. 

With less than two months to go, how will the day-to-day operations of your clients’ businesses be affected, and how can you help them prepare for the change? 

How ERR may affect the day-to-day running of your clients’ businesses 

If a client makes tax-free payments to employees which fall under Travel and Subsistence, Small Benefit and Remote Working Daily Allowance, they must prepare to comply with the ERR. They’ll need to report to Revenue the amount paid under these categories, and the payment date. For the Remote Working Daily Allowance, they will also need to report the total number of days the allowance was paid for. 

What should you and your clients do to prepare? 

1. Know which benefits are and are not taxable 

The first step for clients is to familiarise themselves with the rules around taxable and non-taxable benefits. Revenue is asking for information on non-taxable payments to be reported as it will help them in cases where employers may not be following the rules. So, it's important to make sure you and your clients are aware of the types of employee expenses and benefits they are required to pay tax on, if they want to avoid any penalties or fines. 

1. Learn about the new requirements 

The next step is to learn as much as you can about the new requirements. Here at Bright, we’re holding regular ERR webinars to keep accountants and businesses up to date with everything they need to know. We also have our ERR hub, where you can find all the information and resources you need to keep you updated.  

1. Clients may need to evaluate how they currently reimburse employees 

Next, clients will need to look at how they currently reimburse employee expenses and benefits. From our recent survey of 331 of our customers, we found that 18% of those surveyed reimbursed employees’ expenses as part of the normal payroll run, 31% reimbursed employees as soon as they submitted a claim, and 23% reimbursed both through payroll and on an ad hoc basis. The remaining 28% said that there are never any travel and subsistence claims. 

How your clients reimburse employees may determine how the payments will be reported to Revenue. For example, if they reimburse expenses through the payroll only, then it makes sense to continue to do so and use a software, such as Bright’s solution for ERR, BrightExpenses. This streamlines reporting employee ERR payments which have been paid through the payroll software.  

As their payroll processor, clients will likely expect you to report the payments to Revenue. If this is the case, it is important that you discuss the extra workload with your clients and adjust your pricing accordingly. 

If your clients reimburse employees on an ad-hoc basis, be it by bank transfer or petty cash, and want to continue to do so, they’ll have the option of manually reporting the payments to Revenue, each time a payment has been made. BrightExpenses offers a less manual option, where the expenses can be inputted into BrightExpenses and sent directly to ROS.  

If you have clients who reimburse both through the payroll and on an ad-hoc basis, BrightExpenses could be a good option as it gives the option of reporting both through the payroll and manually, in the easiest and most time efficient manner.  

4. Discuss with clients the best option for reimbursing employees from January 2024 

We are likely to see many businesses change how they reimburse expenses once ERR comes into force. For example, they may choose to reimburse through the payroll only, as it means all expenses for the past week or month can be easily reported at the same time, as the reimbursements are all being made on the same date.  

If you have clients who reimburse employees on an ad-hoc basis, and who would like you to report these payments on their behalf, this will be very impractical for both parties. Payments must be reported either on or before the payment date. This could mean dealing with lots of last-minute requests from clients asking you to report payments which have been made that day.  

5. Get the right tools in place 

The final step is to review your current payroll system to ensure that it includes the necessary functionalities to comply with ERR. You should also work with your software provider to identify any updates or modifications that might need to be done before ERR kicks off. Additionally, educate your payroll team on the new regulation and train them on how to operate these functionalities. 

If you use payroll software BrightPay, Thesaurus Payroll Manager or Surf Payroll for your clients’ payroll, they will be integrated with our solution for ERR, BrightExpenses. This means that from your payroll software, you’ll be able to send all the information Revenue needs directly to BrightExpenses. Then, from BrightExpenses, all the information can be sent to ROS in just a few clicks. 

If you’re interested in learning more about how BrightExpenses can make ERR easy for you and your team, express your interest today. 

Prepare today for January 2024

ERR's introduction will impact employers who make tax-free payments to their employees, and they must comply by submitting the details electronically to Revenue. This regulation comes into effect on 1 January 2024, and businesses must prepare to comply with the new requirements. Business owners should review their payroll systems, educate their team, and maintain accurate records to ensure compliance. It's crucial to take steps now to prepare for ERR and avoid any potential compliance issues in the future.