Real Time Information (RTI) is the biggest change to the PAYE system since 1944. 1.4 Million employers are to start reporting under RTI in April. All employers, with very limited exceptions, should be regularly reporting under RTI by October 2013. The basic rule is that the reporting of payments made to employees has to be ‘on or before’ the date of payment to the employee – a requirement which will increase the administrative burden for many employers.
On 19 March, HM Revenue & Customs (HMRC), recognising this increased administrative burden, announced a relaxation of the rules regarding small employers (with less than 50 employees). Until 5 October 2013, such employers who find it difficult to report every payment to employees at the time of payment may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th). This is a significant relaxation for employers who pay their employees weekly or even more frequently. They will now only have to report monthly rather than every payday - 12 reports rather than 52 or more.
HMRC have also confirmed their estimates of the savings and costs of RTI:
- savings of £330 million per year from the abolition of reporting requirements;
- ongoing administrative costs of £30 million per year;
- costs of checking and amending data at £20 per PAYE scheme;
- training and familiarisation £50 per PAYE scheme; and
- indicative costs for software of £300.
HMRC say “There may also be additional costs for employers who currently operate bespoke arrangements which do not meet the strict requirements of the current PAYE regulations. The costs of changing bespoke processes to processes that operate PAYE at the time the employee is paid are not reflected in HMRC's estimates, as this is not a new requirement. It is how PAYE should always have been run.”
If you wish to make any representations to HMRC, including on whether these cost estimates accurately reflect the impact on your business please let us know.