HMRC have admitted that the largest employment tax shake up in the last 70 years may cause more cost to businesses than previously thought.
We have reported for months now that the Real Time Initiative (RTI) will cause significant problems to small businesses, causing extra work and receiving feedback from employers, HMRC have now acknowledged that its official estimates on the impact on businesses “may not be accurate”.
The tax office have said that they will monitor the “potential burdens” and “improvements” over the first months of the new regulations that have just recently come into force.
Employers now have to report Pay As You Earn (PAYE) information for each member of staff in “real time”, which means more than a million businesses — as well as charities, churches and families who employ nannies or cleaners —must immediately tell the taxman about any wage payments. However, HMRC have given small businesses a six-month grace period in which they can report once a month, but will still have to get to grips with the new rules and software before complying fully in October.