Monthly direct debit
Employers' Income Tax
Employers’ Income Tax includes:
- Income Tax
- Pay Related Social Insurance (PRSI)
- Universal Social Charge (USC)
- and
- Local Property Tax (LPT) Deduction at Source.
Revenue collects direct debit payments for Employers’ Income Tax on the third last working day of the month. You cannot select a different date.
If opting to pay Employers’ Income Tax by direct debit, you can select either fixed direct debit or variable direct debit.
Direct debit is collected in arrears. This means that the payment to cover the December liability is taken from your account in January.
Employers’ Income Tax returns
Since the 2019 tax year, you report your employees’ pay and deductions as they are paid. Revenue then issue you a monthly statement based on your submissions. This is on the fifth day of the following month and shows a summary of the total liability. The statement is treated as the return if no amendments or corrections are made before the return due date.
- Example 1
The accounting period for Employers’ Income Tax, Pay Related Social Insurance, Universal Social Charge and Local Property Tax is 1 January to 31 December.
This means your first payment must be in February to cover the Employers’ Income Tax you owe for January.
Your final payment for the period will be in January of the following year. This is to cover what you owe for December.
If you avail of the fixed direct debit scheme, you must ensure that the cumulative monthly payments are sufficient to cover the annual liability.
Setting up an Employers’ Income Tax fixed direct debit
To set up a fixed direct debit you must:
- file and pay any outstanding returns and taxes
- have monthly Employers’ Income Tax liabilities of €25,000 or less
- apply through Revenue Online Service (ROS)
- and
- ensure that your monthly payments are large enough to cover your annual Employers’ Income Tax amount.
Revenue can charge you interest if there is an underpayment.
Allocation of fixed direct debit payments
Your fixed direct debit payment should cover the amount of tax submitted on the payroll notification. Where the payment is too low Revenue will allocate the next fixed direct debit payment to the period.
- Example 2
You have set up a fixed direct debit for €5,000 per month.
Your February payroll was €6,000.
The full March direct debit and €1,000 of the April direct debit will be allocated to February.
- Example 3
You have set up a fixed direct debit for €5,000 per month.
You file a higher amended payroll for March in August.
The payment that is due to be paid in September will be allocated to the underpayment in March.
Revenue can charge you interest if there is an underpayment. We allocate the fixed direct debit payments to the oldest liability first. This will reduce the amount of interest you could be charged.
Where the payment is too high, Revenue will allocate the payment to any underpayments in a period in the relevant year.
- Example 4
You have set up a fixed direct debit for €5,000 per month.
Your September payroll was €4,000.
The €5,000 from the October Direct Debit will be allocated to September resulting in a credit of €1,000.
Your October payroll is €6,000. The November Direct Debit of €5,000 allocates to October leaving an underpayment of €1,000.
At this point the credit in September of €1,000 will be offset to the October period to clear the outstanding liability.
Amending an Employers’ Income Tax direct debit
You can change your bank details for your direct debit on ROS.
You can increase the amount you pay monthly at any stage during the year on ROS. You can also decrease the amount, but only up to a maximum of three times in the year. Following a change, the system will update the value of your direct debits for the remaining months of your annual period plus one month.
You can suspend up to three direct debit payments during the annual period. You must still meet your expected annual Employers’ Income Tax amount after amending or suspending the direct debit.
- Example 5
You decide to reduce the direct debit payments you make for the 2023 liability on 1 July 2023. The direct debit amounts will change for the remaining months July 2023 to January 2024 only. The months before July 2024 will not change.
If you wish to amend the amount for the following year, you must repeat the process in early February 2024. The change will then apply for the following 12 months.
Cancelling an Employers’ Income Tax direct debit
You can cancel your direct debit at any stage through ROS. Once the direct debit is cancelled, the system will resume issuing returns based on your normal pay and file pattern.
Missed or unpaid Employers’ Income Tax fixed direct debit payments
Your bank may return your payment as ‘unpaid’. If it does, we will send a letter to inform you that the payment was unsuccessful.
You can pay the missed payment:
- through ROS
- or
- by debit or credit card.
You should replace the cancelled direct debit payment before the next debit is due from your account. Revenue will allocate the next direct debit to the period of the cancelled payment if you have not replaced it.
We may remove you from the direct debit scheme when direct debits are unpaid.
Next: Variable direct debit scheme