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More than 99 per cent of Pay As You Earn (PAYE) records are now successfully being reported in real time, HM Revenue and Customs (HMRC) announced today as it launched a package of support for micro businesses.

Almost 93 per cent of employers, and nearly 99 per cent of employers with 10 or more employees, are now using the new process to send PAYE information about their employees in real time, and the majority are finding the new system easy to use.

HMRC is offering a continued package of support for micro businesses (with nine or fewer employees) who need more time to adapt to reporting PAYE information in real time. This will allow them to report PAYE information on or before the last payday in the month, rather than every payday, until April 2016.

This is narrower than the existing relaxation to real time reporting, which applies to employers with up to 49 employees and will end, as planned, in April 2014. The existing relaxation allows employers to report as late as the end of the tax month of payment, which means that (for instance) salaries paid after 6 January can be reported as late as 5 February. Employers who are already reporting PAYE information on or before the date they pay their employees should continue to do so. And HMRC will be encouraging and supporting micro businesses to adapt their processes to move to payday-by-payday reporting as soon as possible.

All employers will have to report PAYE on or before the date they pay their employees by April 2016.

The package was developed with employer, agent and payroll software representatives and the Department for Work and Pensions, to help micro employers as they move towards reporting PAYE information in real time.

The package, which applies only to existing employers, also includes:

• improved guidance, including best practice scenarios 
• working with the software industry to harness technology to develop new ways to report PAYE information on or before the date employers pay their employees – for example, by exploring the use of mobile apps.

Real Time Information (RTI) will support the operation of Universal Credit, which brings together means-tested in and out-of-work benefits.

HMRC’s Director General for Personal Tax, Ruth Owen, said:

“The vast majority of employers are now successfully reporting PAYE in real time and are finding it easier to do this than they expected. But we appreciate that for some micro employers it has presented challenges for them to meet the deadlines. This package strikes a good balance by ensuring RTI improves PAYE processes while minimising the impact on micro businesses and their agents by giving them up to two years to adapt.”
 
For more information go to: PAYE Real Time Information: Package of Help Announced for Micro Employers

Notes

1. Real Time Information (RTI) represents the biggest change to the payroll system in over 60 years. It is designed to reflect the labour market fluidity of the 21st century and deliver improved accuracy to employers and employees. RTI means employers and pension providers report deductions and payments they make to HMRC at the time they are made, rather than after the end of the tax year, as was the case before. This enables the tax system to better ensure the right tax is being taken at source.
2. The RTI pilot was launched in April 2012 with just 10 employers and, by the end of the pilot on 5 April 2013, over six million individual records were being reported in real time.
3. In March 2013 HMRC announced a temporary relaxation for employers with 1 – 49 employees. This followed extensive consultation and recognised that some small employers needed longer to adapt to reporting PAYE information in real time. This relaxation, which will come to an end in April 2014, allows employers with fewer than 50 employees to send PAYE information to HMRC by the end of the tax month in which the payments are made (a tax month always ends on the 5th of a calendar month).
4. The new narrower relaxation announced today:
   • will only apply to employers with 10 or fewer employers
   • applies only to existing employers. Employers starting to operate PAYE later than 5 April 2014, as well as existing employers with 10 or more employees, will need to report each time they pay their employees from April 2014
   • employers who qualify for the new narrower relaxation will need to report their PAYE information on or before the last payday in the tax month, rather than by the end of the tax month.