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In April 2013 employers will have to start sending PAYE returns electronically, using RTI-enabled payroll software, to 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. This new process will replace sending a separate return at the end of the year.
Some small business groups have criticised the adminstrative burden it will bring to smaller firms, although HMRC claims that RTI will make it easier for employers to administer PAYE and will make tax more accurate.
Preparation
HMRC advises businesses to follow these three stes to be ready for the change over:
1. Visit HMRC website at hmrc.gov.uk/rti for information about RTI, including how to prepare, payroll software options and hints and tips to help avoid some common pitfalls.
2. Acquire new or updated payroll software – employers will 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.
Ruth Owen, HMRC’s Director General 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.
“Although reporting PAYE in real time will be straightforward for most, some preparation is needed. There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the Lower Earnings Limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”
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Susie Hughes © Shout99 2012
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