Starting April 2013 HM Revenue & Customs (HMRC) is introducing Real Time Information (RTI) to improve the operation of PAYE; the most fundamental change to PAYE since its creation in 1944. ‘Real Time Information’ means employers will tell HMRC about tax, national insurance contributions and other deductions at the time they are made as part of the payroll process, instead of waiting until after the end of the tax year. Payroll software will collect the necessary information and send it to HMRC Online. RTI only affects the submission of PAYE information – payment arrangements will remain unchanged.
HM Revenue & Customs proposed benefits of RTI:
- Make PAYE more accurate for individuals, over time reducing the number of bills and repayments sent after the end of the tax year.
- Enable HM Revenue & Customs to pursue late payments more effectively.
- Reduce tax credits error and fraud.
- RTI will support universal credits by providing the Department of Work and Pensions with up to date information about claimants’ employment income. This will enable them to calculate universal credit payments without the need for claimants to supply employment or pension income information.
- From April 2013 – Large and medium sized employer will start using RTI
- From August 2013 – Small employers will start using RTI
These dates are subject to change by HM Revenue & Customs, but by October 6, 2013 all employers will be required to use RTI.
For more details on how to transition to Real Time Information, visit the HM Revenue & Customs website.