If you are an employer or pension provider you need to make sure that you are ready for the new reporting system for Pay As You Earn (PAYE) being introduced by HMRC.
Real Time Information (RTI) is being introduced to improve the flow of information about employees/pensioners to HMRC and it is one of the biggest changes to PAYE since it was introduced in 1944. It is also needed to enable the Universal Credits system to be implemented.
Using RTI employers will tell HMRC about PAYE payments at the time they are made as part of the normal payroll processing. This will be sent at the same time that you pay your employees/pensioners and be sent electronically.
Most employers will be legally required to use RTI from April 2013, and all employers will be required to report RTI by October 2013. HMRC will be informing you when you will need to make the move to RTI. Please note, this will only affect the submission of PAYE information; how you pay your employees/pensioners will remain the same.
Although this all sounds some way off you need to make sure you are ready for the changes. Once you are using RTI there will be penalties charged for not submitting the data to HMRC on time.
So what do you need to do?
If you use commercial software to process your payroll, or an agent, or payroll bureaux, you should contact them now. Manually processing a payroll will not be compatible with RTI. HMRC supply free software called “basic PAYE tools” for nine or fewer employees and this will be updated to operate RTI.
You should also ensure your records are up to date with your employees’ personal details.
What are the benefits of this system?
Once RTI is in place, you will not longer be required to submit the Employers Annual Return form P35. In addition, RTI will ensure that HMRC has up to date details of employees pay and tax, which should help avoid under and over payments of tax.
HMRC are currently running a pilot that ‘reportedly’ is going well. So all the signs are that RTI is coming – make sure you are ready for it.
For further information or assistance in getting ready for RTI please contact Alison Hailstone