PAYE for Directors: why filing a tax return isn’t enough
Many directors of farming companies are happy to file an annual income tax return and leave it at that. It feels like a job well done—your taxes are submitted, and the Revenue box is ticked. But if you’re a director and your income isn’t going through PAYE, you could be opening yourself—and your company—up to bigger problems down the line.
Let’s break it down.
Filing a tax return? That’s just part of the story
If you’re a director of a limited company—even a small family-run farming business—you’re classed as an “office holder.” With that comes a legal requirement: your income must be processed through the Pay As You Earn (PAYE) system.
This isn’t just for employees. PAYE applies to director salaries, too, and it ensures Income Tax, PRSI, and USC are deducted throughout the year. Submitting an income tax return doesn’t replace this obligation—it’s an additional requirement.
Skipping PAYE could land you in hot water
It might seem like a harmless omission—especially if your company is small and informal—but not processing director income through PAYE can trigger serious consequences.
If Revenue finds your company hasn’t been deducting and remitting PAYE correctly:
The company could face fines of up to €4,000 per breach
The company secretary could face personal fines of €3,000 per breach
Revenue can hold you personally liable for the unpaid PAYE, interest, and penalties
If the company ends up footing the bill, it may seek to recoup the money from you, which could impact your personal finances.
You could risk more than just a fine
As a director, you have extra responsibilities beyond the day-to-day running of the farm. Failing to meet your PAYE obligations isn’t just a tax issue—it can lead to being disqualified from acting as a director in future. In extreme cases, criminal charges could even come into play.
Selling your business? PAYE matters there too
Thinking of passing on or selling your farming business one day? Then, PAYE compliance needs to be in order.
Buyers will examine your company’s tax and financial records as part of their due diligence. Any non-compliance—especially around PAYE—could:
Delay the sale
Leads to lower offers
Require you to offer guarantees or indemnities
Or, worst of all, put them off entirely
Banks are watching too
While banks might not always dig deep into PAYE specifics, they will assess how well-managed your business is. Poor compliance can cast doubt on your leadership, make loan applications harder, or result in tougher terms being applied.
What should you do now?
If your director’s income hasn’t been processed through PAYE, it’s not too late—but you do need to act.
Make sure your salary is processed via the company’s payroll
Ensure tax, PRSI and USC are deducted at source
Continue filing your annual income tax return—but understand it’s not a substitute for PAYE
Talk to a tax advisor with experience in the farming sector
And just to be clear
PAYE isn’t optional for directors. Filing an income tax return is only part of your responsibilities. Ignoring PAYE puts your business—and your own finances—at risk.
Sorting it now means you’ll avoid potential fines and problems in the future. You’ll also make life easier if you want to sell the business or apply for finance.
