A new system of reporting payroll information to HM Revenue & Customs (HMRC) is being introduced from April 2013 and represents the biggest change for payroll since the introduction of PAYE in 1944. Under this new system called ‘Real Time Information’ (RTI) employers will need to submit electronically a whole range of information whenever a payroll is run!
These fundamental changes in payroll reporting are being implemented by HMRC to ensure that that the PAYE system keeps pace with new employment patterns and the introduction of Universal Tax Credits.
The Main Changes:
- Employers will be required to send Real Time Information (RTI) returns electronically to HMRC each time they run their payroll.
- In most cases under RTI the required information will need to be reported to HMRC ‘on-or-before’ payment is made to employees
- Certain information not previously required will now need to be made available such as, hours worked, earnings of employees paid below the lower earnings limit for NI, the passport number of employees where available and information relating to temporary and casual workers
In preparation for RTI employers will need to ensure:
- They hold the RTI enabled-software or else use a payroll bureau, such as the payroll service provided by Marsh Vision
- That all data held regarding an employee (such as full name, date of birth, gender, address and a valid National Insurance number) is accurate and up-to-date
- They incorporate certain information into their payroll records which has not been previously requested by HMRC
- Register for PAYE Online with HMRC, unless they have already done so
- Align HMRC’s own data with their own
What’s not changing?
It should be noted that RTI will NOT change an employer’s obligation to deduct and pay over the correct amount of income tax and national insurance from an employee’s remuneration as well as pay over their own Class 1 National Insurance liabilities. Payment dates will also remain unchanged.
Employers will also still be required to issue P45-type information when an employee leaves and provide each employee with a P60 following the end of the tax year showing a summary of earnings and tax deducted. Employers will also be required to obtain P46-type information from new joiners and incorporate it into their RTI returns.
Certain end of year employer returns such as forms P35 and P14 will no longer be required as this information will now be provided to HMRC during the tax year each time the payroll is run
HM Revenue & Customs have published a very useful Business Readiness checklist called ‘Are you ready to report PAYE in real time?’ which can be accessed by clicking on the following link: