Payroll in Ireland: what it costs and what employers must report

By Richie Lennon

Rules checked 12 October 2026

To run Irish payroll, calculate pay and deductions using the latest Revenue instructions, report to Revenue on or before payday, and meet separate MyFutureFund obligations where applicable. Budget for gross pay, employer PRSI and employer pension contributions. Qualifying tax-free expenses and vouchers may still need ERR reporting. Before approving payments, check what changed, what must be reported and the total cash required. Then reconcile the payroll, bank and accounts.

You can pay staff correctly and still have an incomplete payroll process. The salaries may be approved while a voucher, expense reimbursement or insurance renewal goes unreported. The bank may have enough for net pay while the Revenue payment is unfunded.

Before approving a run, you should know the total cost, what must be reported and which payments are still to leave the bank. This guide explains those checks for an ordinary Irish employer. Directors, overseas workers and unusual employment arrangements need their own classification and tax checks.

Gross pay is earnings before deductions; net pay is what the employee receives after them. Employer PRSI and employer pension contributions add to your business’s cost. PAYE deducts Income Tax, USC means Universal Social Charge, and PRSI means Pay Related Social Insurance. Employee deductions remain inside gross salary; remitting them later does not create another salary expense.

A €20,000 pay run can cost €22,580

Consider five employees paid €4,000 gross each in October 2026.

For this illustration, all five are ordinary Class A employees at the higher employer PRSI rate and are enrolled in MyFutureFund. Their earnings remain below the scheme’s €80,000 annual cap. There are no benefits in kind, other pensions or additional deductions.

Assume the checked payroll calculates €5,200 of combined PAYE, USC and employee PRSI. That is an assumed payroll output, not a flat tax rate or a take-home-pay calculation for any individual.

The money has three destinations:

The State’s MyFutureFund contribution is separate. You do not add it to the employer’s bill.

If you budgeted €20,000 because that is the gross salary total, this run is underfunded by €2,580. If you looked only at the €14,500 employee payment, you would miss €8,080 going elsewhere.

Your payroll provider or accountant should be able to explain all three totals and show where they appear in the accounts. If the only answer you receive is “the payslips are done”, the financial picture is incomplete.

The payment dates matter too

Suppose you have €20,000 available before payday. Paying employees €14,500 and funding €600 for MyFutureFund leaves €4,900.

There is still a €7,480 Revenue bill. Without further cash coming in, you are €2,580 short when that payment falls due.

For an employer paying Revenue monthly and filing and paying electronically through ROS, that October liability is normally payable by 23 November. MyFutureFund contributions have a payday deadline and direct debit collection can follow on or shortly after payday.

Put each payment into your cash flow forecast, on its expected date. Revenue’s later payment date does not make that money available to spend twice.

Set up the employment before the first pay run

Register for employer PAYE with Revenue before paying employees. Agree the pay frequency, contractual payday and a cutoff for approved changes. Give the person running payroll the employee details, start date, pay terms and any benefits or pension arrangements.

Then establish the two notification processes:

Revenue Payroll Notification, or RPN. Request the latest RPN for each employee before running payroll. It supplies tax credits, cut-off points and relevant instructions, including LPT deductions where applicable. If an RPN cannot be retrieved, Revenue requires the emergency basis. Do not copy last month’s tax deductions because the salary has stayed the same. Revenue explains the RPN process.

Automatic Enrolment Payroll Notification, or AEPN. For MyFutureFund, the National Automatic Enrolment Retirement Savings Authority, NAERSA, identifies enrolled employees and issues the payroll instruction. Set up the employer portal, payment method and notification process. An RPN does not replace an AEPN.

Check the worker’s status as well. A contract calling someone a contractor does not settle whether they are employed. A director’s PRSI treatment needs a separate assessment; being on the payroll does not automatically put every director into Class A.

Prevent the first-payslip problem

Collect the employee’s PPS number and correct start date before the first run. For most new hires, the employer registers the employment by requesting an RPN. A person starting their first job in Ireland must register it through myAccount first. Revenue sets out the starter and leaver process.

If an RPN is unavailable, apply the emergency basis and explain what needs fixing. Do not promise that every emergency-tax deduction will be refunded on the next payslip: a cumulative RPN allows the payroll refund, while a Week 1 RPN does not. Revenue explains the refund distinction.

When someone leaves, include the leaving date in their final payroll submission. Starters and leavers need the same discipline as salary changes.

Which employer PRSI rate applies?

For ordinary Class A employment, the current employer rates took effect on 1 October 2026:

Use the corresponding thresholds for the actual pay frequency. Other PRSI classes and special circumstances have different treatment.

Employee PRSI has its own rules. In particular, ordinary Class A pay of €38 to €352 a week can carry no employee PRSI while employer PRSI still applies. Low pay does not, by itself, make someone Class J.

Check the Department of Social Protection’s Class A rates. For planning a new hire, cost the actual salary and employment rather than applying one employer percentage across the whole team.

MyFutureFund adds a separate payroll obligation

MyFutureFund began on 1 January 2026. For employees enrolled in the scheme, the 2026 to 2028 contribution rates are 1.5% employee, 1.5% employer and 0.5% State, on earnings up to €80,000 a year.

For every pay run, retrieve the current AEPN, apply the contribution instruction and make the separate payroll submission to NAERSA. Its employer handbook sets an 18:30 Irish-time deadline on payday for payroll submissions and contributions. Direct debit collection happens on or shortly after payday, so funds must be available.

An existing pension arrangement is not automatically enough to exempt an employment. Minimum standards apply to defined contribution schemes and PRSAs. Check the arrangement and current notification with the pension provider and NAERSA rather than simply switching deductions off.

Our Irish auto-enrolment guide covers eligibility and pension choices in more detail. Use the MyFutureFund employer handbook for the operational deadlines.

Reporting deadlines and monthly Revenue payments

Quarterly and annual Revenue payment arrangements have different payment schedules. They do not remove the monthly return obligation. Revenue sets out the return and payment rules.

Enhanced Reporting Requirements (ERR) have a separate reporting process. The expenses and benefits section below shows which payments belong there.

Run payroll with a clear cutoff and approval

I want payroll to involve less chasing. Start by asking why information arrives late and how the process could get it from a reliable source earlier.

For payroll, that means approved hours and changes in one place, with a named owner. More reminder emails will not fix an unclear cutoff or a manager who has never approved overtime.

A workable pay run has five steps.

1. Collect approved changes. Include starters, leavers, hours, overtime, bonuses, absences, benefits and pension changes. Confirm the effective date and who authorised each change.

2. Calculate and compare. Retrieve the notifications, run payroll and compare it with the previous period. Investigate unexpected movements in headcount, gross pay, net pay, tax, PRSI and pension contributions. An unchanged total can hide one overpayment and one underpayment.

3. Approve the final version. Give the business approver the change report, gross and net totals, employer cost and upcoming remittances. Approval needs to cover the version actually being paid. If the run changes afterwards, identify the change and get fresh approval before releasing the revised amounts.

4. Authorise and check payments. Confirm the payment date, recipients and amounts against the approved run. Check that payments completed. A bank file prepared or submitted is not evidence that employees received their money.

5. Reconcile and record. Match the payroll journal, employee bank payments, Revenue statement and pension remittances. Keep the approval and submission confirmations. The payroll expense and unpaid balances must both be right. In the example, the €7,480 Revenue liability stays in the payroll tax payable account until paid; paying it clears that balance rather than charging another €7,480 to wages. Leave a named person responsible for unresolved differences.

In building Around Pay, we focused on connecting payment approval with execution and reconciliation. The same discipline belongs in payroll: identify who approves the calculation, who releases the money and who checks the result. Automation should make those responsibilities easier to carry out.

Expenses and benefits: tax-free does not mean unreported

Salary is only one input to payroll. Travel reimbursements, gift vouchers, working-from-home allowances, insurance and pensions need their own treatment. Tell the payroll operator what the business has provided, even when no tax is expected.

Ask two questions: is it taxable, and where must it be reported? The answers can be different.

Tax-free payments still need an owner

The current ERR categories are untaxed travel and subsistence, the remote-working daily allowance and qualifying small benefits. ERR is a separate reporting process from ordinary PAYE reporting. It is not a declaration of every tax-free expense your business incurs. Revenue lists the information to report.

Buying vouchers from a supplier is not the same as providing them to employees. Record who receives each benefit, its value and the date it is provided. Payroll cannot report accurately from a single invoice that says “Christmas vouchers”. Check the Small Benefit Exemption conditions before distributing them.

For example, 15 qualifying home-working days at €3.20 produces a €48 allowance. The reporting needs the days, €48 and the payment date. A round €100 payment labelled “WFH” does not acquire the same exemption. Revenue’s remote-working guidance sets out the conditions.

A tax-free allowance still changes the cash requirement

Extend the earlier five-employee illustration. Suppose each employee also has 15 qualifying home-working days and receives €48.

That adds €240 to the employee payments. The bank total becomes €14,740, while gross salaries remain €20,000 and the salary-related employer payroll cost remains €22,580. Including the separate allowances, the business must fund €22,820.

The €240 needs its own records and ERR reporting. It must also reach the right expense account. If you compare the bank payment only with net salary, you will find a difference; if you put the allowance into taxable salary by mistake, you create another problem.

This is an extension of the illustration, assuming all allowances qualify for exemption. It shows why the approval should distinguish salary, reimbursements, deductions and employer costs.

Insurance, bikes and pensions take different routes

For health insurance, give payroll the gross premium and policy details before cover starts or changes. The invoice paid to the insurer can be lower because of tax relief at source. Using that lower amount for BIK understates the benefit. Revenue explains employer-paid medical insurance.

Cycle to Work has limits of €1,250 for ordinary bikes, €1,500 for e-bikes and €3,000 for cargo bikes, including eligible safety equipment. It normally applies once every four years. Keep the qualifying-journey declaration and any salary-sacrifice agreement. Revenue’s scheme rules matter more than the label on the invoice.

For pensions, identify the arrangement before setting up deductions. Revenue’s payroll benefit-information requirements include relevant employer retirement contributions. A contribution’s favourable tax treatment does not remove the need for correct reporting and payment. Check qualifying pension coverage separately for MyFutureFund.

Before every run, ask the person approving payroll: what have we paid or provided outside salary since the last run? That catches the voucher bought on the company card, the insurance renewal and the expense reimbursement that would otherwise reach payroll after the deadline.

Late changes need a revised approval

A benefit can change payroll deductions without adding the same amount to an employee’s bank payment. Check the benefit-in-kind treatment before promising a fixed net reward. If you agree to cover the employee’s tax as well, ask for the full cost.

For a bonus agreed after the cutoff, confirm whether it belongs in this run or the next. Recalculate the totals and obtain approval for the revised payment. A last-minute edit to the bank file can leave the payment and reported payroll disagreeing.

Explain changes affecting employees’ payslips. Software does not explain an unexpected deduction for you.

When payroll goes wrong, find out what is wrong first

There is a difference between wrong information reported to Revenue and the wrong amount actually paid to an employee.

If the employee was paid correctly but the submission contains a data error, amend the submission through the supported payroll or ROS process. Revenue advises correcting it before the return deadline.

For an actual overpayment or underpayment, Revenue’s guidance normally corrects the pay through the next payroll. Agree and check any recovery or additional payment, including the employment-law position, before moving money.

A corrected submission does not retrieve money from an employee’s account. A correcting bank payment does not, by itself, update Revenue or pension records. Check each affected record and payment, then reconcile again. Revenue’s correction guidance distinguishes these cases.

Use payroll to make the next staffing decision

The monthly report should show the cost of employing your team, not just the salaries paid. Compare the actual cost with the budget, and explain the movement: a new hire, overtime, absence cover, a bonus or a pension change.

For an agency, I would check capacity and the work being priced and billed before adding another salary. More people do not solve work that is being delivered without enough revenue behind it. Our agency profitability guide develops that point.

For any business, test the full cost of the proposed hire in the forecast. Include the payroll taxes and pensions that sit outside take-home pay, then allow for recruitment, equipment, benefits and any cover the role needs.

Our guide to remuneration packages helps you cost the wider offer. The payroll figure is part of the employment decision, not the entire cost of hiring.

Irish payroll support from Around Finance

Heloise Jansen is Around Finance’s Payroll Specialist. Our Irish payroll service uses BrightPay, with an agreed process for inputs, preparation, approval and client payment authorisation.

The scope should make clear who handles pensions, MyFutureFund, ERR, submissions and reconciliation. It should also explain how the payroll figures reach your accounts. Read how our payroll service works and meet Heloise.

If you run an Irish business turning over €250,000 or more and payroll is disconnected from your cash planning or reporting, book a Finance Fit Call. We can discuss the payroll and accounting support your business needs.

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