Real-time PAYE payroll reporting will go ahead as planned

HMRC intends to stick to its timetable to introduce real-time PAYE reporting even though accountants, employers and payroll software providers have expressed concerns that the timetable is unachievable.

The PAYE system for accounting for income tax and National Insurance was first introduced into the UK in 1944. At present, employers send the Revenue details of employee deductions at the end of each tax year. Under real-time reporting, they will notify HMRC each time they make the deductions.

HMRC will receive this information automatically using payroll software linked to the BACS payment network.

Despite the fact that 75% of respondents to an HMRC consultation on implementation of real-time reporting said the timetable would not be achieved, HMRC says there is no flexibility for the go-live date because the “universal credit” is being introduced in 2013.

HMRC wants employers to have a smooth transition into RTI and has said its employment records will be aligned with employers. Payroll software suppliers have already told the Revenue that they need more time to develop and test their software and now HMRC has decided that the products will undergo a one year test period commencing next April.

Karen Thomson from the Chartered Institute of Payroll Professionals said she was pleased to see that HMRC is working with accounting firms to explain how real time reporting will affect employers.

Employees could lose their entitlement to Universal Credit if their employer submits incorrect information to HMRC, so it’s important that everyone fully understands the way the system works in advance, she added.

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