We hope you all had a wonderful Christmas and are looking forward to a prosperous New Year. If you run a business, this year will no doubt bring along all the usual challenges we all face from time to time. However this year, there is a new one! The biggest change to the operation of PAYE, since its inception, is going to happen. It is called RTI. If you have not done anything about it yet, you must start now.
What is RTI?
RTI is a priority government programme aimed at improving the operation of PAYE. It will help to close the “tax gap”, improve customer service, and achieve cost reductions for HMRC.
Tax errors can occur, and under the current procedures, it can take over a year for HMRC to see them. They would only be identified when the year’s P35/P14’s are processed. HMRC are constantly playing catch up, and it has made it more difficult to collect the right amount of tax and NIC’s due.
How will it effect Employers?
Under RTI, an electronic file will be sent to HMRC every time a payroll is run ie weekly or monthly. Forms P35 and P14’s will no longer be required at the end of the year, although P60’s will still be issued.
Under RTI, HMRC will know exactly what employees are earning throughout the year.
HMRC will therefore know exactly what PAYE and NIC’s are due from that Employer for that month or quarter. This will combat employers who are not paying over the full amount.
The DWP also needs instant access to current pay information when assessing claims for benefit. RTI will cut down on having to write to employers for pay information, and speed up claims.
When will this come in?
April 2012 – RTI pilot began
October 2012 – Large employers encouraged to migrate early
April 2013 – everyone else will be phased in between now and October 2013.
What can Fletcher Business Services do?
As part of our payroll service, we will of course take care of this for our clients. If you are interested in out sourcing your payroll or switching providers, please do get in touch. You should receive bulletins and communication from HMRC informing you of your obligations regarding RTI.