HMRC believes that the current PAYE system is inadequate and antiquated as work and pay practices are different from when the system was first introduced in 1944. From April 2013 there will be a new way to report PAYE information in Real Time Information. PAYE will not change, just the way, and how often, you send PAYE details to HMRC. Instead of sending all PAYE details in one go, at the end of the tax year, from April employers (or your ‘accountant’, ‘bookkeeper’ or’ payroll bureau’) will have to:
- Send details every time a payment is made, at the time it is made
- Use RTI enabled payroll software to send the details electronically as part of your routine payroll process.
This will be a legal requirement from April 2013 unless HMRC gives notice of a different date between now and then. Watch this space! The Inland Revenue maintain that they are introducing this new system for two important reasons:
1. It will improve the operation of PAYE for employers, HMRC and employees.
2. It will also provide accurate records on wages and tax for the forthcoming Unversal Credit, so eligible employees will get the right amount of benefit.
Getting ready for this change: STAGE 1. Do you run your own Payroll System? If YES – Do you use payroll software to calculate and submit your employees ‘ PAYE information?
If NO Your PAYE information will need to be sent to HMRC on line – every time a payment is made – using PAYE RTI enabled software. You can do this using commercial payroll software, or You use a payroll service provider, such as an accountant or a payroll bureau, who will do it for you, or If you have 9 or fewer employees you can use some of the free payroll packages available, including HMRC’s Basic PAYE Tools.
If YES you will need to update your payroll software to an RTI-enabled package. You need to check your software providers website to find out when your current package will be updated. If you use the HMRC’s Basic PAYE Tools, this will be updated for RTI in February 2013. If you want to access more details – go to hmrc.gov.uk/rti Now go to STAGE 2
OR
If at STAGE 1 your answer is NO – If you use someone outside your business to run your payroll, such as a payroll bureau, accountant or bookkeeper, talk to them now about the service they will provide for you in future, and ask what you need to do to get ready for RTI.
Now go to STAGE 2 – To get ready for RTI you will need up-to-date details of ALL your employees – including temporary and casual workers and employees paid below the National Insurance Lower Earnings Limit.
Telephone 01925 413210 or e-mail on margaret@warringtonaccountants.co.uk
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