From next year one of the biggest overhauls to the processing of pay-as-you-earn (PAYE) data will go live – so how can you make sure your business stays up-to-date?
April 2013 sees the formal rollout of Real Time Information (RTI), a new way of processing employee data in real time.
It has been brought in in a series of phases and trials and, by October 2013, will be mandatory for all employers to process PAYE data using the new system. What is RTI?
Under RTI, the way employers report PAYE will switch to a real-time system under which changes are reported to the tax authority as and when they happen – rather than at the end of the fiscal year as is the case under the present system.
It represents the most comprehensive change to PAYE since its inception over 60 years ago and will affect virtually all employers.
The change is designed to ensure data reporting keeps pace with more business patterns and improve reporting procedures.
HMRC invited 320 companies large and small to take part in a year-long pilot scheme which began in April this year. From July, about 1,300 early adopters joined the scheme.What HMRC says
HRMC's head of RTI communications Jane Brothwood said: "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 that 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."Concerns
Recent research by the Federation of Small Businesses (FSB) found a quarter of firms are unaware of the coming changes to PAYE.
The federation's survey of 1,700 small businesses found that only 16 per cent of respondents were fully aware of the RTI programme and a quarter (25 per cent) had never heard of it.
The businesses polled think that learning new processes (33 per cent) to manage the changes as well as dealing with potential enquiries and inspections from HMRC (24 per cent) will pose a challenge to their business.
John Walker, national chairman of the FSB, said: "With only six months until RTI is due to be implemented, the FSB has real concerns that not enough businesses are aware that it is just around the corner.
"This system is linked to the government's flagship Universal Credit scheme and we're concerned that it could flop if government does not step up its game in communicating the changes."
Mr Walker added it was "critical" businesses affected by RTI are fully aware of the changes, given there are a number of steps they must complete before they can provide the information to HMRC.Preparation is key
It is crucial to start preparing for RTI. Companies need to think about how the new process will affect their payroll and overall business processes and put plans in place.