Ireland: Revenue updates PAYE re-grossing examples — check how site payments are recorded

1. Understand what was updated

The eBrief is dated 15 October 2026. The linked manual now identifies itself as the October 2026 edition; this is the version used for this article. The underlying section 986A treatment has applied since 2018. A changed example must not be described as if the legal rule itself began this week.

The distinction matters when reviewing an older payment. Keep the actual payment date, payroll treatment and evidence together; do not simply apply the newest example to every historic transaction. The updated examples are a prompt to review the business process with the payroll adviser, not a substitute for calculating the facts of each case.

Revenue — eBrief 150/26

Revenue — Tax and Duty Manual Part 42-04-66

2. Separate employment pay from the label on the paperwork

The manual addresses total non-operation of PAYE and disguised remuneration. Descriptions such as an invoice, advertising expense or an unrecorded cash payment do not by themselves decide whether an amount is employment income. On a building project, a consistent payment record is more useful than an informal note that says only “site help”.

Make the purpose of each payment clear: who worked, what period it concerned, how it was authorised and which payroll or purchase document supports it. Do not recategorise a worker or a payment merely to match the accounting description. Where status or treatment is uncertain, gather the contract and working facts for the adviser instead of changing the label after the event.

Revenue — Tax and Duty Manual Part 42-04-66

3. Know what re-grossing means before using an example

Re-grossing works backwards to a notional gross payment using income tax; USC and PRSI are then calculated on the appropriate re-grossed amount. Revenue’s example 6 assumes an employee who has already used the standard-rate band and credits, with an additional disguised payment of €1,000. At the example’s 40% income-tax rate, €1,000 ÷ 0.60 gives approximately €1,667 before the further calculations.

That is a worked example with specific assumptions, not a universal multiplier for site payments. The Revenue Payroll Notification, payment date, employee circumstances and applicable PRSI treatment matter. Avoid copying the resulting liability into your own forecast without those checks.

Revenue — Tax and Duty Manual Part 42-04-66

4. Treat an innocent error as a question to establish

Revenue distinguishes genuine innocent payroll errors from circumstances calling for re-grossing. Acceptance depends on the case; it does not mean that an employer can declare every missing payment an innocent error or that PAYE, USC and PRSI disappear. Record the nature of a mistake accurately and let the supporting evidence explain what happened.

For example, a fictional business notices that authorised overtime on a signed site timesheet does not match its payroll report. Preserve both records, identify the affected employee and pay period, and ask the payroll provider what correction is required. Do not overwrite the original timesheet or quietly include the difference in a later supplier invoice.

Revenue — Tax and Duty Manual Part 42-04-66

5. Build a monthly site-to-payroll reconciliation

Compare approved hours and other employment payments with the payroll output, the bank payments and the ledger classification. Investigate differences rather than assuming that a matching bank total proves correct tax treatment. Keep the explanation of an adjustment, who authorised it and when it was implemented.

Divide the review into manageable questions: is a payment missing, duplicated, assigned to the wrong period or described inconsistently? Keep access to employee information limited to the people who need it. A project costing sheet may need a labour total; it does not need to expose every employee’s personal payroll record to a client or subcontractor.

6. Keep labour costing and payroll compliance connected

A contractor’s quotation needs a realistic labour cost, but the selling price and the employee’s net payment are different figures. If a payroll correction changes the project cost, record that cost change internally and review future estimating assumptions. Do not imply that a client automatically owes a tax correction caused by your own payroll treatment.

Use Vocalys to organise project quantities, labour tasks and quotation notes, while keeping the payroll calculation in the appropriate payroll process. Before sharing a customer document, check that it contains the commercial scope and does not reveal confidential employee information.

Reusable job sheet

• Use the October 2026 manual
• Identify the real payment and pay period
• Reconcile site approval, payroll and bank records
• Keep the applicable RPN and adviser’s calculation
• Preserve the original records and correction trail
• Separate client quotes from private employee information

Period / project: […]
Payment and purpose: […]
Site approval reference: […]
Payroll and bank references: […]
Difference identified: […]
Evidence and adviser review: […]
Correction / owner / completion date: […]

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