Year End Reconciliation

Please NOTE: From 1 January 2019, the P35 is abolished in line with PAYE Modernisation.


Once all payroll periods have been processed and completed for the final pay period, a review of the payroll for the year should be performed, prior to the submission of the final P35 to Revenue.

The year-end reconciliation process is very much employer specific, as each employer operates their payroll adopting varying policies and procedures, performing varying payroll checks during the tax year.

It is the responsibility of each employer to ensure that payroll is complete and accurate on an ongoing basis. The reconciliation process at year-end should form the final in this series of checks.


The employer and/or payroll administrator/manager may assess their reporting needs in order to complete the reconciliation process. A third party, such as your accountant and/or financial advisor, may participate or advise in this process.


In addition to a taking a back up of the payroll data, as a general guide CollSoft recommends the preparation, review and retention of the following reports in completion of the year end review:

1. P35L and P35LT Annual Return Report
2. P35LF Annual Report
3. Gross to Net Report
4. Benefit in Kind Report
5. Illness Benefit Report
6. Pension Report
   

1. P35L AND P35LT ANNUAL RETURN REPORT

The P35 is the Employers annual return which must be submitted to Revenue at the end of each tax year (i.e. for year ending 31st December).
CollSoft Payroll will generate this report from each pay periodical payroll input and processed by the user.


To prepare this report:

• Choose Revenue Returns from the menu bar
• Choose P35 Annual Return
• From the sub-menu choose the P35L and P35LT report

Year End Reconciliation: P35 menu



Each part of the P35 report is generated and printed (these can be saved and/or exported also), in the same format as the official Revenue P35 stationery.


P35L and P35LT Declaration
The P35L and P35LT report generates a P35 declaration which breaks down the total deductions made through payroll for the year, i.e. PAYE, USC, PRSI and LPT. This is the total of deductions that the employer should have remitted to Revenue periodically either through the P30 submission or a Direct Debit arrangement.


Year End Reconciliation: P35 Declaration



P35L
The P35L follows the declaration, this gives a payroll total, by employee, for every employee on the payroll for the tax year.



Year End Reconciliation: P35L





P35 Control Summary
On the final page of the report CollSoft Payroll prepares a P35 Control Summary of the payroll totals for the tax year.


Year End Reconciliation: P35 Control Summary


The P35 Control Summary totals should be reconciled to the additional individual payroll reports which follow below.



2. P35LF

The P35LF returns the year end totals of:

• Benefit in Kind (taxed through the payroll)
• Medical Insurance Premiums (included in Benefit in Kind)
• Summary of Pension Products and contributors

Revenue require theses listed statistics as part of the Employers Annual Return for the tax year.

To prepare this report:

• Choose Revenue Returns from the menu bar
• Choose P35 Annual Return
• From the sub-menu choose the P35LF

Year End Reconciliation: P35LF Menu




The P35LF is a summary report of all the totals, as stated above. A breakdown by employee is not required for this totals report, the P35L and P35LT report will include the medical insurance eligible for TRS at employee level.




Year End Reconciliation: P35LF Report






3. GROSS TO NET REPORT

The Gross to Net report can be generated in varying detail or summary of events. The detailed report will detail each employees payroll by pay period for the tax year.


To prepare this report:

• Choose Reports from the menu bar
• Choose Gross to Net> Detail by Employee>
• Confirm the Starting and Ending period for the report. For the purpose of the year end reconciliation the period should cover the entire tax year (i.e. week 1 to week 52/53)

Year End Reconciliation: Gross to Net Report menu



The Detail by Employee version of this report will generate a payroll report for each employee breaking down their payroll by payroll period, similar to the Tax Deduction Card.

The Gross Totals for the entire payroll are printed at the end of the report. These totals should agree to the P35 Control Summary.



Year End Reconciliation: Gross to Net Report - Detail by Employee



Choosing to Prepare the Report by Employee will generate a substantial report if you have a lot of employees on file. If you have generated periodical reports and reconciled all payroll figures on a periodical basis during the tax year then the Gross to Net Report - Total by Employee report may be sufficient. This report gives a total by employee omitting the line by line detail by pay period.

To prepare the Gross to Net - Total by Employee report;

• Choose Reports from the menu bar
• Choose Gross to Net> Total by Employee>
• Confirm the Starting and Ending period for the report. For the purpose of the year end reconciliation the period should cover the entire tax year (i.e. week 1 to week 52/53)

Year End Reconciliation: Gross to Net Menu




The Gross to Net totals by employee report gives the annual totals by employee omitting the line by line detail by pay period, this report is more compressed than the detail by employee.



Year End Reconciliation - Gross to Net Summary Totals by Employee


If payroll is allocated across varying Departments, depending on your reporting requirements, each report can be prepared by Department to aid the allocation and reconciliation of Department payroll costings and reconciliation.




4. BENEFIT IN KIND REPORT

Benefit in Kind is a notional amount which captures additional non-cash benefits that employee receive as an addition to their paid salary. The non-cash benefit is allocated a 'cash value' in order to determine the tax due on the item. Refer to the Benefit in Kind menu in the Knowledgebase for more information and guidance.

Benefit in Kind is not included in the above Gross to Net report. To reconcile the payroll at year end the Benefit in Kind report must form part of the reconciliation process, if Benefit in Kind forms part of your employee remuneration agreements and has been taxed in accordance with Revenue BIK guidelines through the periodical payroll.

To prepare the Benefit in Kind report:

• Choose Reports from the menu bar
• Choose Benefit in Kind> Summary be Employee>
• Confirm the Starting and Ending period for the report. For the purpose of the year end reconciliation the period should cover the entire tax year (i.e. week 1 to week 52/53)

Year End Reconciliation: Benefit in Kind Report menu



The Benefit in Kind Summary report will show each employee and the year to date monetary value or perk associated with that benefit, as input in the payroll by the payroll administrator, to be taxed through the payroll.





Year End Reconciliation: BIK Report


The total of all these Benefits should agree to the Benefit in the P35 control summary and the P35LF.





5. DISABILITY BENEFIT / ILLNESS BENEFIT

Illness Benefit is a benefit payment made by the Department of Social Protection to employees on certified short term illness leave from work. This payment may be paid directly to the employee or the employer. However it is paid, the employer is obliged to deduct PAYE from this payment even if the payment is made directly to the employee and retained by the employee, forming a notional pay item similar to BIK.
Illness Benefit is not reported on the Gross to Net Report and so a separate report must be prepared to complete the end of year reconciliation.
To reconcile the payroll at year end the Illness Benefit report must form part of the reconciliation process, if Illness Benefit has been accounted for through the payroll within the periodical payroll processed.

To prepare the Disability/Illness Benefit report:

• Choose Reports from the menu bar
• Choose Disability Benefit> Detail>
• The report will automatically prepare the report for all periods year to date

Year End Reconciliation: Disability / Illness Benefit Report




The Disability / Illness Benefit report will show each employee and any Disability / Illness Benefit accounted for and taxed through the payroll during the tax year.



Year End Reconciliation: Disability / Illness Benefit Report


The total of all Disability / Illness Benefit should agree to that reported on the P35 control summary.




6. PENSION REPORT

The P35LF reports the total pension contributions deducted by the employer through the payroll in the tax year. A check that the total pensions reported on the P35LF to the pension contributions deducted by employee should be carried out to ensure complete and accurate reporting in the P35LF.


To prepare the Pension report:

• Choose Reports from the menu bar
• Choose Pension Contributions> Summary be Employee>
• Confirm the Starting and Ending period for the report. For the purpose of the year end reconciliation the period should cover the entire tax year (i.e. week 1 to week 52/53)

Year End Reconciliation: Pension Report Menu



Reconcile the total pension contributions per the Pension Report agree to the total pensions as per the P35LF.



Year End Reconciliation: Pension Report