P.A.Y.E – Are You Real Time Ready?
All employers, commencing April 2013, will be required to inform HMRC every time that an employee is paid. This is being phased in over a six month period and all employers will be obligated to comply by October 2013. This is as opposed to the current system, in which HMRC are informed of an employee’s earnings on a yearly basis. The new system is to be known as ‘Real Time Information’ (RTI). Operationally, this is a radical and ambitious change that HMRC are implementing and they are hoping that this will bring the P.A.Y.E system in sync with modern working life. They also intend that RTI will work in accordance the forthcoming ‘Universal Credit’ benefit system. Can anyone say, ‘Big Brother’?
An employer will not be able to make an RTI submission to HMRC without providing the employee’s forename, surname, gender and date of birth. The full address is also mandatory for new starters but not existing employees. National Insurance Numbers are also requested. Employers must submit details to HMRC of the Tax and NI treatment of wages paid each time a payment is made, as well as the number of hours an employee has worked during that period.
Of course, all this means that manual payroll can no longer be undertaken and you will need to use either payroll software or, if you have nine or fewer employees, HMRC’s Basic PAYE Tools. Therefore it is strongly recommended that you start to review your Payroll procedures now so that you have sufficient information to comply when RTI is implemented. You will also need to get to grips with all the guidance on the HMRC website or speak to your payroll provider if you have one.
Prior to RTI going live you will need to ensure that all your employee data is present and correct, talk to your payroll software providers about the upcoming changes and check with your BACS supplier if there is anything that needs doing in respect of payments. And finally, good luck!
If you have any queries please contact the Tax Department at Green and Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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