Understanding P35 and P35L in Ireland: A Comprehensive Guide

For businesses operating in Ireland, payroll compliance is a critical responsibility. One of the most important tax-related submissions was the P35 annual return, along with the P35L supplement. Although the P35 system was phased out with the introduction of PAYE Modernisation in 2019, understanding these historical returns remains essential for businesses dealing with past payroll records or Revenue audits.

In this guide, we will explore the P35 and P35L forms, their purposes, and how they were used before being replaced by the modern payroll reporting system.

What Was the P35?

The P35 was an annual payroll tax return that employers in Ireland were required to submit to Revenue. It provided a summary of Pay As You Earn (PAYE), Pay-Related Social Insurance (PRSI), Universal Social Charge (USC), and Local Property Tax (LPT) deductions made throughout the tax year.

Key Features of the P35:

• Required for all registered employers.
• Submitted annually by 15th February following the end of the tax year.
• Included details of all employees and their earnings, along with deductions for tax, PRSI, USC, and LPT.
• Helped Revenue ensure that correct tax payments were made by employers.
• Penalties applied for late or incorrect submissions.

What Was the P35L?

The P35L was a supplementary document that accompanied the P35 return. It provided detailed information about each individual employee who worked for an employer during the tax year.

Key Features of the P35L:

• Listed every employee’s PPS number, earnings, tax paid, PRSI contributions, and USC deductions.
• Included details of both active and ceased employees within the tax year.
• Allowed Revenue to cross-check payroll details with employees’ tax records.

A variation of this form, the P35LT, was used for temporary or seasonal employees who had short-term employment.

The Transition to PAYE Modernisation

The Irish tax system underwent a significant change on 1st January 2019 with the introduction of PAYE Modernisation. This replaced the P35 system with Real-Time Reporting (RTR), ensuring that payroll information is submitted to Revenue each time employees are paid, rather than annually.

Benefits of PAYE Modernisation:

• Elimination of the P35 and P35L forms.
• Improved compliance and accuracy with real-time payroll reporting.
• Reduced administrative burden for employers.
• Better transparency for employees regarding tax deductions.

Under the new system, employers must submit a Payroll Submission Request (PSR) to Revenue on or before each payday, detailing employee earnings, deductions, and tax contributions.

Importance of Historical P35 Records

Even though the P35 and P35L are no longer in use, businesses may still need to access these records for:

• Revenue audits and compliance checks.
• Employee tax queries or disputes about past earnings.
• Historical payroll reconciliation.

Employers should ensure that past P35 records are securely stored and easily accessible if needed.

Conclusion

While the P35 and P35L forms were integral to payroll compliance in Ireland before 2019, their replacement with PAYE Modernisation has streamlined payroll reporting. Employers now report payroll details in real time, reducing errors and administrative work.

For businesses navigating payroll compliance in Ireland, it’s crucial to stay informed about the latest tax reporting obligations. If you need help with payroll management, consulting a payroll services provider can ensure compliance with Revenue requirements.

For expert Payroll Services in Ireland, contact Osservi today!