PAYE – RTI is coming!

H M Revenue & Customs are urging employers to get ready for the PAYE changes that are coming into effect in three months time.

From April 2013 employers will be required to send PAYE returns electronically, using the new RTI payroll software to HMRC each time they pay their employees as part of the routine payroll process.

Details included on the return will be all employees’ pay, tax and deductions.  This process will replace the current system whereby a return is sent separately at the end of the tax year.

HMRC are asking that all employers act now, to ensure they are fully prepared for the changes and have acquired or updated the RTI software through their payroll software provider.  They are also asking that employers check all the information they hold for their employees to ensure that they are up to date and accurate.

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

“To avoid a last minute rush it’s vital employers act now, if they have not already done so.

“Employers will need to send their first return – called a ‘Full Payment Submission’ or ‘FPS’ for salary or wage payments made to employees on or after 6 April – and if they have 250 or more employees they will have to send an Employer Alignment Submission before the first FPS.

“Although reporting PAYE in real time will be straightforward for most, some preparation is needed. There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the Lower Earnings Limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”