A recent study of small business owners suggests many have not yet prepared for the changes to PAYE in 2013 requiring Real Time Information (RTI) reporting, with 36% of small businesses unaware.
So what is RTI? HM Revenue & Customs (HMRC) is essentially introducing a new way of reporting PAYE, so that employers and pension providers will need to tell them about payments at the time they are made as part of their payroll process instead of once at Year End.
Most employers will be legally required to report payroll information in real time from April 2013 with all employers doing so before October 2013. HMRC will be contacting you when your business needs to make this move.
Once you begin to submit information in real time, if you do not submit your PAYE data to HMRC on time you may incur penalties.
It might seem some way off but it’s worth preparing now as the changes to PAYE information reporting could have a significant impact on small businesses.
Here are some key things to consider, with more information available from HMRC:-
- You’ll need to review how you collect and process the information so that it’s in the right format for RTI purposes and ready at the right time.
- You can use payroll software to report to HMRC online, but you will need to check as it could need updating so that it can process and submit RTI data.
- If you don’t currently use payroll software, HMRC will still need you to submit information electronically so plan ahead now so that your business is able to do this when required to do so.
- If you have nine or fewer employees, you can also use HMRC's free Basic PAYE Tools. There will be a new version available to download once you are invited to operate PAYE in real time.
The changes should actually make life a bit easier in the long run, as you will submit information about PAYE payments throughout the year as part of your payroll process, taking some of the pain out of Year End.
Chartered Accountant, Birmingham
Share your experiences
Add your own comments to any of the blogs that really strike a chord via the Parker website.