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PAYE shakeup begins

Date: (10 April 2013)    |    

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Employers from 6th April are required to move a new way of reporting Pay As You Earn (PAYE) in real time, sometimes called Real Time Information (RTI), where they report to HMRC each time they pay employees, rather than annually. This updates the PAYE system so that it is quicker, easier and more accurate.
With the introduction of RTI, employers will benefit from much simpler requirements for reporting to HMRC and the abolition of the extensive annual tax return that the old system required.
David Gauke, Exchequer Secretary to the Treasury, said that RTI would bring benefits to the one million people in the UK with multiple jobs, as HMRC starts to get details of their tax every time their wages are paid, rather than just once a year. This would reduce the number of cases where someone is found to have under or overpaid tax during the year.
RTI will deliver the new Employment Allowance, which will reduce the cost of taking on new staff for small business. RTI will make it simple to administer, to ensure maximum take-up and help aspiring businesses grow by hiring employees or expanding their workforce.
Real Time Information will be better for employers and employees. It will bring PAYE into the 21st century.
Ruth Owen, HMRC’s Director General Personal Tax, said it was the year of transition as employers would start reporting PAYE in real time from their first payday on or after 6 April. Though it would take some time for all the employers to get into the routing of real time reporting HMRC was there to help and support, including offering free software for employers with nine or fewer employees, regular live Twitter Q&As, YouTube videos and road shows across the country.
For the vast majority of employers, the first real time return will be the first employee payday on or after 6 April 2013. To make sure that employers are ready for RTI they should follow these three simple steps go to HMRCs website for comprehensive information about RTI, acquire new or updated software, as employers would need new software for payrolls, start checking and updating employee information which is vital.
All employers received letters about RTI in February 2013 and October 2012. The RTI pilot was launched in April 2012 with just 10 employers. By 31 March 2013, PAYE records for around six million people will be reported in real time.
From April 2014 every business and charity in the UK will be entitled to a £2,000 Employment Allowance to reduce their employer National Insurance Contributions bill each year. The Employment Allowance is permanent, and open to all businesses and charities in the UK, regardless of their age, size or location.
RTI will support the operation of Universal Credit – the Government’s flagship welfare programme – which brings together means-tested in work and out-of-work benefits, Tax Credits and support for housing, and will improve work incentives and make work pay.