Enter Your E-mail

Proposals to continue the simplified PAYE scheme for care and support employers until April 2014 are welcome but they do not cater adequately for those employers not currently within it.

Background

Real time information, or RTI, is a new way to report PAYE information to HMRC. It will be mandatory for most employers from April 2013. Under RTI, information about tax and other deductions are collected and transmitted to HMRC every time an employee is paid (on or before the date of payment). Forms P35, P14, P45 and P46 are to be phased out as this new system is adopted.

Care and support employers are those who engage a carer to look after them or a relative of theirs in their own homes.

Low Incomes Tax Reform Group (LITRG) comments on HMRC proposals

Commenting on proposed legislative changes to PAYE and RTI, LITRG welcomes the continuation of the simplified PAYE scheme for care and support employers until April 2014. Nevertheless, the proposed changes do not cater for care and support employers not currently in the simplified scheme but who may need to revert to paper filing during 2013/14, perhaps because a deterioration in their health means they cannot easily operate RTI.

LITRG is also critical of the lack of adequate help, warning and guidance on RTI that is available to those users of the simplified PAYE scheme who are not care and support employers. The Government hopes that RTI will simplify the PAYE system, but LITRG fears that the latest legislative changes could have the opposite effect for some.

The group’s recommendation is that either new care and support employers should be allowed to use the simplified scheme for 2013/14 (thus reversing the decision to close that scheme to new entrants), or – preferably – that further concessions and/or reasonable adjustments are introduced for care and support employers within RTI. It would make sense for HMRC to defer inviting simplified deduction scheme users to join RTI until later in 2013/14.

The decision to apply basic rate (‘BR’) codes to pension lump sum payments instead of emergency codes as hitherto is welcome, but LITRG recommends certain additional changes to cater for other situations where the proposed change does not apply and therefore overpayments of tax are likely to continue.

LITRG's full response is available here.