RTI take up

More than 1.4m employer PAYE schemes are now reporting to HMRC in real time since the launch of new tax reporting requirements in April say Harris & Co chartered accountants Northampton as part of their accountancy services.

This means that more than 83% of SMEs and more than 1m (77%) micro employers have already started to report PAYE in real time, and that information about 44.5m payments made to employees between 6 April and 5 May was successfully reported online to HMRC.

The RTI pilot was launched in April 2012 with just 10 employers and, by the end of the pilot on 5 April 2013, over 6m individual records were being reported in real time.

Reporting in real time requires employers and pension providers report deductions and payments they make to HMRC at the time they are made, rather after the end of the tax year, as at present, allowing the tax authority to ensure the right tax is being taken at source.

HMRC said today it would make efforts to extend the temporary relaxation of the new reporting rules for businesses with fewer than 50 employees from October 2013 until April 2014, at which point the relaxation will come to an end.

The extension means that businesses will not be required to change their approach halfway through the tax year.

The relaxation has meant that these businesses are still required to report through the new system, but are able to do so once a month, rather than each time they pay their employees. This gives small businesses that pay weekly (or more frequently), but who only run their payroll at the end of the month, some extra time to adjust to the new requirements.

As of April 2014, all employers need to plan to be reporting in real time, but HMRC is continuing to work with businesses over the coming months to identify whether there are any specific circumstances with on-or-before reporting that it needs to cater for in the longer term.

PAYE information reported in real time is already being used by the Department for Work and Pensions (DWP) to calculate Universal Credit amounts paid to people in its pathfinder pilot in the north west of England, ensuring the amount of benefit accurately reflects their level of income.

Exchequer Secretary to the Treasury David Gauke said that this is the biggest reform of PAYE since its introduction nearly 70 years ago.

‘The transition is going well, and the vast majority of employers are now reporting their PAYE information in real time, meaning that HMRC’s records are becoming more accurate and up-to-date. DWP is already using the new system to underpin its Universal Credit pilot, helping it to be more responsive to changes in claimants’ income levels. This is all good news, but we will continue to listen to and work with businesses to ensure that all employers are reporting in real time by April 2014,’ said Gauke.

HMRC’s director general for personal tax, Ruth Owen, said: ‘The roll-out continues to exceed our expectations. I am delighted that 83% of SMEs and 77% of the smallest businesses are already on board. We will now write to the minority of employers who are not, to establish how we can help them meet the requirements of reporting in real time.’

For most large employers, HMRC has specified a start date between July and September 2013.

HMRC announced in March 2013 that employers with fewer than 50 employees, 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 temporary relaxation was due to run until 5 October 2013.

But all employers need to plan to be reporting in real time from April 2014.