Introduction: Payroll—A Hidden Risk for Irish Employers?
If you’re an Irish employer, payroll might seem like just another monthly admin task. But beneath the surface lies a complex system of PAYE Modernisation, real-time reporting, Benefit-in-Kind (BIK) rules, and tax-free allowances—all governed strictly by Revenue.
Get it right, and your staff are paid on time with no disruptions. Get it wrong, and you’re looking at Revenue penalties, audits, or underpaid staff taxes.
In this guide, we’ll explore common payroll mistakes made by Irish employers, why they happen, and—more importantly—how to avoid them. Whether you’re running a small startup or managing a growing team, this could save you time, money, and stress.
- Mismanaging PAYE and Real-Time Reporting
Since Revenue’s PAYE Modernisation (2019), employers must report payroll submissions in real time via ROS (Revenue Online Service). Yet, many Irish businesses:
- Calculate deductions incorrectly
- Miss submission deadlines
- Rely on outdated spreadsheets instead of Revenue-approved payroll software
Why It’s a Problem:
Revenue tracks every payslip and payment. Incorrect deductions of PAYE, PRSI, or USC can lead to underpayments, employer penalties, or Revenue reviews.
Solution:
- Use Revenue-compliant payroll software for calculations and submissions
- Ensure real-time reporting with every pay run via ROS
- Monitor Revenue’s monthly payroll statement for discrepancies
Pro Tip: Outsourcing payroll to a professional service like Intax.ie can guarantee timely submissions and accurate reporting—keeping your business compliant and your employees paid without stress.
🔗 Related Blog: Understanding the Revenue Online Service (ROS): A Guide for Irish Business Owners
- Forgetting to Track Benefit-in-Kind (BIK) Benefits
Did you know that perks like company cars, gym memberships, or work phones can count as taxable benefits? Many employers overlook Benefit-in-Kind (BIK) reporting or mistakenly assume certain benefits are tax-free.
Why It’s a Problem:
BIK must be included in your payroll reporting via ROS. Failure to report correctly could result in Revenue penalties and backdated charges.
Solution:
- Maintain clear policies around staff benefits
- Include taxable perks in your payroll system for BIK reporting
- Keep detailed records of mixed-use assets (e.g. phones used personally)
- Incorrectly Classifying Employees as Contractors
In Ireland, misclassifying workers is a common payroll error. Many employers incorrectly treat employees as independent contractors to avoid PAYE responsibilities.
Why It’s a Problem:
Revenue’s criteria for employment status are strict. Misclassification can result in penalties, backdated employer PRSI, and tax arrears.
Solution:
- Use Revenue’s Code of Practice for Determining Employment Status
- When in doubt, seek professional advice before engaging a worker as self-employed
- Missing Payroll Deadlines
Unlike annual returns, payroll reporting is ongoing. Submissions are required every pay period before payment to employees is made.
Why It’s a Problem:
Late submissions could result in compliance flags and fines under Revenue’s PAYE Modernisation.
Solution:
- Set calendar reminders tied to payroll dates
- Use automated payroll software or delegate payroll management entirely
- Inadequate Payroll Record-Keeping
Revenue expects Irish businesses to maintain detailed payroll records for at least six years. This includes payslips, tax credit certificates, benefit documentation, and payment histories.
Why It’s a Problem:
In the event of a Revenue audit, missing records can expose your business to penalties and enforced re-assessment.
Solution:
- Use cloud-based payroll software for secure document storage
- Regularly back up files and ensure they’re easily accessible
- Underusing Tax-Free Employee Benefits
Perks like the Small Benefit Exemption (now €1,500 in 2025), Cycle to Work Scheme, and TaxSaver commuter tickets can lower your payroll taxes—but many employers fail to utilise them.
Why It’s a Problem:
Without leveraging these schemes, employers overpay payroll taxes and miss out on motivating staff cost-effectively.
Solution:
- Offer tax-efficient benefits as part of your payroll package
- Structure non-cash perks carefully to maximise tax relief
Pro Tip: A salary sacrifice arrangement can make schemes like Cycle to Work cost-neutral for your business while providing genuine staff perks.
🔗 Related Blog: Employer’s Guide to Providing Tax-Efficient Benefits in Ireland (2025 Update)
Conclusion: Why Payroll Compliance Matters
Payroll may seem routine—but each payslip carries the weight of Revenue regulations. From PAYE deductions to BIK submissions and employee benefits, errors can snowball into costly compliance issues.
At Intax.ie, we handle payroll for Irish employers—accurately, efficiently, and in full compliance with Revenue. No missed submissions, no forgotten benefits, no costly mistakes.
Ready to simplify payroll?
Let Intax.ie manage your payroll, so you can focus on running your enterprise.
