Are you ready for Real Time Information?
Small businesses now have less than a year to get ready for one of the biggest shake-ups in payroll procedure since 1944. Pay As You Earn (PAYE) is being brought into the digital age with a new way of reporting payments called Real Time Information (RTI).
For almost 70 years, employers have reported on PAYE payments at the end of the tax year. By October 2013 for small business - and from April 2013 for larger companies - employers will have to tell HMRC at the time payments are made.
Analysts are concerned about the increased administrative burden on businesses, particularly small-scale employers who manage the payroll themselves or pay staff frequently.
The change is being brought in to make it easier for HMRC to administer and to support the Universal Credit system when it comes into operation in October 2013. It's hoped RTI will improve accuracy and reduce the need for HMRC to make corrections, particularly demands for underpayments that can hit employees at the end of the tax year. The new system should also make it harder for benefits cheats and make it easy for HMRC to track down late payments.
Under the new system, whenever an employee is paid, employers must submit a number of details including taxable pay, tax, National Insurance Contributions information, pension and hours worked.
HMRC is urging all employers to start making preparations for the changes now, such as getting the appropriate payroll software and ensuring employee data is up to date.
Acas provides advice and guidance on many aspects of Pay, such as explaining to employees how pay is calculated and what information is needed in itemised pay statements. Acas has also published the Advisory booklet - Personnel data and record keeping.
Visit the Acas Training and Business Solutions area for more information.