Employers are being urged by HM Revenue and Customs to get ready for major PAYE changes that come into effect in three months' time.
In April 2013, employers will have to start sending PAYE returns electronically, using Real Time Information (RTI) enabled payroll software, to HM Revenue and Customs (HMRC) each time they pay their employees as part of routine payroll processes. The returns will include details of all employees' pay, tax and deductions.
The RTI pilot was launched in April 2012 with just 10 employers. Since then, the pilot has expanded three times. By 31 March 2013, HMRC expects PAYE records for around 6 million people to be reported in real time. Employers are required to begin to report in real time in April 2013, unless HMRC has specified a different date.
Ruth Owen, HMRC's Director General of Personal Tax, said: "To avoid a last minute rush it's vital employers act now, if they have not already done so. Employers will need to send their first return - called a 'Full Payment Submission' or 'FPS' for salary or wage payments made to employees on or after 6 April - and if they have 250 or more employees they will have to send an Employer Alignment Submission before the first FPS."
Reporting PAYE in real time will bring it into the 21st century and will allow HMRC to receive information on employees' earnings, tax and National Insurance Contributions as they are paid, rather than at the end of the year.
RTI will support the operation of Universal Credit - the Government's flagship welfare programme - which brings together means-tested in and out-of-work benefits, Tax Credits and support for housing and will improve work incentives and make work pay.
Preparing for RTI - HMRC advice for employers - three key steps:
1. Visit HMRC website at hmrc.gov.uk/rti for comprehensive information about RTI.
2. Acquire new or updated payroll software - employers need to talk to their payroll software provider or their payroll service-provider (if they have one) about this.
3. Start checking and updating employee information. It's vital that the information employers have about their employees is accurate and up to date.
Even though the introduction of RTI should make it easier, administering your payroll can be time consuming and burdensome, diverting energy and resources from the core activities of your business. Ellis & Co can relieve you of this burden by providing a comprehensive and confidential payroll service.
If you have any questions about RTI or payroll, contact one of the team who will be more than happy to help.