By April 2013 it is expected that all micro, small and medium-sized employers and most large employers and payroll bureaux will begin sending payroll information to HMRC using the so-called real time information system (RTI) scheme. HMRC believes that all employers will be using the RTI system by October 2013 in time for the introduction of Universal Credit by the Department for Work and Pensions.
RTI will allow HMRC to collect information about payroll payments as they are made rather than the end of the tax year.
According to HMRC this will have a number of benefits for employers:
- Annual employer returns will be phased out, reducing costs for HMRC and employers.
- HMRC will have the real time information needed to support the Government’s welfare reform agenda.
- HMRC will be able to help prevent and detect errors and fraud within the welfare and PAYE systems.
- HMRC will not need to wait until year end to identify underpayments by employers and collect those debts.
- In some circumstances, HMRC will be able to adjust employees’ tax codes in year to reflect their changing income and therefore, over time, reduce the need to send employees repayments or bills after the end of the year.
In order to submit payroll data you will need an internet connection and be using payroll software that facilitates online filing of data to HMRC. Please contact us if you need more information or guidance about your obligation to join this scheme next year.
Please note that our in-house payroll bureau would be happy to manage your payroll for you from 6 April 2013. If this is of interest please call Maureen Owens or Helen Miller for further details.
Sue Stephens, Personal Tax Consultant