EMPLOYERS should start preparing now for a new PAYE reporting system being introduced next year.
That’s the message from Jane Brothwood, head of Real Time Information Communications at HM Revenue & Customs (HMRC).
The taxman is abolishing the annual system where employers tell HMRC what deductions they have made from employees’ pay at the end of the year. Instead, they will have to send details every time a payment is made. The new system is know as Real Time Information (RTI).
What’s more from April 2013 they will have to use payroll software to send the details electronically and send the details as part of the normal payroll process.
Jane Brothwood said: “By getting rid of employer annual returns and streamlining the starter and leaver processes, RTI will remove admin burdens from businesses of around £300m each year.
“Reporting PAYE in real time will ensure that employees’ tax records are accurate, so they won’t face big PAYE overpayments or underpayments at the end of every tax year.
It will also provide accurate records on wages and tax for the forthcoming Universal Credit, so eligible employees will get the right amount of benefits or tax credits every month.”
RTI is being introduced progressively to give time for testing new systems. HMRC began piloting RTI in April 2012, with around 310 volunteer employers. The pilot is going well and is on track, says HMRC.
Most employers will begin reporting PAYE in real time in April 2013, with all doing so by October 2013.
Jane Brothwood added: “Businesses of all sizes should start preparing for RTI now by talking to their payroll software provider or payroll service provider about how they are developing appropriate payroll software.
“It’s also vital that employers check that information about their employees is accurate and up to date. This involves making sure surname, forename, gender, address, date of birth and National Insurance Number (NINO) are correct and in the right format.
“Employers should also make sure that they add staff to their payrolls who will now need to be included with their RTI submissions, for example, those under the Lower Earnings Limit (LEL).
> Visit www.hmrc.gov.uk/rti