Fleet News

Taxation: Why it's all change for PAYE

By Jane Brothwood, HMRC head of communications, RTI

From April 2013 there will be a new way to report PAYE in real time,  Real Time Information (RTI).

Under the present PAYE system, employers tell HMRC what deductions they have made from employees’ pay at the end of the year.

Reporting PAYE in real time will ensure 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.

PAYE itself will not change – just the way, and how often, employers send PAYE details to HMRC.

Instead of sending all PAYE details to HMRC in one go, at the end of the year, from April 2013 employers will have to: send details every time a payment is made; use payroll software to send the details electronically; and send the details as part of their normal payroll process.

When you provide a car to an employee or withdraw one without replacing it, continue to report this online using P46 (Car).

But by getting rid of employer annual returns and streamlining the starter and leaver processes, RTI will remove admin burdens from businesses of around £300m a year.

RTI is being introduced progressively. We began piloting RTI in April 2012, with around 310 volunteer employers.  
Most employers will begin reporting PAYE in real time in April 2013, with all doing so by October 2013.

Businesses of all sizes should start talking to their payroll software provider or payroll service provider about how they are developing appropriate software.

It’s also vital that employers check that information about their employees is accurate and up to date.

This involves making sure that surname, forename, gender, address, date of birth and National Insurance number are correct.

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).

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  • Gwil Stephenson - 31/10/2012 11:35

    It is sad that the government has gone down the road of allowing HMRC to produce yet another expensive and bureaucratic system. The fact is that with the correct system in place businesses would not have to submit anything at all to HMRC they would simply pay any employees gross into their "income account". This system which is based around banks amd mutuals modified current accounts would save the government billions and small businesses billions (not millions which RTI supposedly does ... but won't in any case). It also gets rid of tax forms for 95% of those that need to fill one in now. It scraps tax codes and even census forms. Quite why the government won't even discuss such a change I think is down to pure laziness and sloppy government it isn't as if the coalition would be philosophically against such a move. It could be, however, they they don't want to force the banks to do anything 21st century or that is socially useful ... but they could bring in the scheme on a voluntary basis forcing only our nearly nationalised bank (RBS/Natwest) to trail blaze. If you want to know more try http://taxandbenefit.org which is probably the best site at explaining such a system.

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