Pay As You Earn real-time reporting could present a significant challenge for small and medium-sized businesses managing their own payroll.
Pay As You Earn (PAYE) real-time reporting will create a significant burden for small and medium-sized businesses managing their own payroll, warns a prominent accountant.
In 2013 PAYE will undergo the biggest shake-up in its near 70-year history with the introduction of Real Time Information (RTI), where all PAYE payments need to be submitted to HMRC online each time a payment is made as part of the payroll process, rather than at the end of the year as they are now.
Gregg Braseby at JC Payroll Services says, 'It will benefit staff and the taxman but create a significant burden for small and medium-sized enterprises, particularly those that manage the payroll themselves and those who pay their staff weekly.'
The new regime starts in April 2013 for large and medium-sized employers and from August 2013 for small employers.
RTI has been introduced in an attempt to make PAYE more accurate for employees, reducing the need for HMRC to issue often hefty tax demands for underpaid PAYE at the end of each tax year.
Other benefits are cited as enabling HMRC to chase late payments more effectively, reduce benefits fraud, and to support the new universal credits benefit regime to be introduced next year.
Braseby says that, under the new approach, employers of all sizes will need to submit what is called a ‘Full Payment Submission’ to HMRC every time an employee is paid, which must show details of all employees paid in the current payroll period including the employees’ taxable pay, tax, NI, pension and hours worked.
'Employers must also submit by the 19th of each month an ‘Employment Payment Summary’ if no payments were made to any employees or if the employer wishes recover statutory payments, NIC compensation and construction industry deductions,' he continues.
'We are recommending that businesses start to prepare now because before the new RTI regime begins in the spring employers will be expected to complete various processes and submit information to HMRC.'