HM Revenue & Customs (HMRC) has started to issue statements about the implementation of the new Real Time Information (RTI) system being introduced next year.
The department is abolishing the annual system where employers tell HMRC what deductions they have made from employees’ pay at the end of the year. Instead, they will have to send details every time a payment is made – in ‘real time’.
Additionally, from April next year, employers will have to use special payroll software to send the details electronically and send them as part of the payroll process.
Jane Brothwood, head of Real Time Information Communications at HMRC said: “By getting rid of employer annual returns and streamlining the starter and leaver processes, RTI will remove admin burdens from businesses of around £30m each year.”
She went on to say that, because reporting PAYE in real time will mean that employees’ tax records are accurate, they won’t face big PAYE over or underpayments at the end of every tax year.
Ms Brothwood added: “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.
“Businesses of all sizes should start preparing for RTI now by talking to their payroll software provider or payroll service provider about how they are developing appropriate payroll software.
“It’s also vital that employers check that information about their employees is accurate and up to date. This involves making sure surname, forename, gender, address, date of birth and National Insurance Number are correct and in the right format.
“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” she concluded.
As an accountant, Simon Denton specialises in providing PAYE advice, support and guidance.