Tax Alert: Revenue PAYE Settlement

Deadline 30th January 2026

Revenue have introduced a PAYE settlement opportunity for employers who may have incorrectly classified workers as self-employed instead of employees for PAYE purposes.

The PAYE settlement is in relation to 2024 and 2025, following the Supreme Court’s Karshan decision, which clarified how employment status should be assessed.

Who this applies to

• Employers who genuinely misclassified workers as self-employed.
• It does not apply where Revenue is already reviewing the case, or where the misclassification was careless or deliberate 

The Revenue Disclosure:
Revenue will allow the payroll obligations to be settled on the following basis:

• Income Tax: 20% of gross payments
• USC: 3.5% of gross payments
• PRSI: Employee and Employer PRSI at normal rates 

Key points to note:

• Payments do not need to be re-grossed
• No penalties will apply if Revenue accepts the disclosure
• Interest will only apply if the tax is paid by instalments
• Payment must be made in full via ROS, or a phased payment arrangement must be requested at the time of disclosure 

Revenue has stated that where misclassification is discovered in the future, it may be treated as a failure to operate PAYE, which could result in:

• Re-grossed tax liabilities
• Interest and penalties

This settlement offers a time-limited opportunity (as per above, with the deadline to 30 January 2026) to correct the 2024 and 2025 misclassification issues on more favourable terms.

What employers need to do

• Review workers currently treated as contractors or freelancers
• Identify any individuals who should have been treated as employees
• Make a disclosure to Revenue through ROS by 30 January 2026

Please do not hesitate to contact us with any queries you may have.