A quarter of small businesses in Oxfordshire are oblivious to major upcoming changes to the pay-as-you-earn (PAYE) system, a survey by the Federation of Small Businesses (FSB) has revealed. The changes, due to take effect from April 2013, will alter payroll reporting duties to HMRC, requiring all employers and pension providers to report their employees’ PAYE payments in real time. With steep fines in order for those companies that don’t comply, Whitley Stimpson is urging the county’s businesses to ensure they understand what’s required by seeking expert financial advice.
“It’s vital that all businesses get to grips with the new real-time reporting requirements as rapidly as possible,” explains Martin Anson, Partner, Whitley Stimpson. “This is the biggest shake-up of the PAYE system in 60 years, and yet alarmingly, awareness levels among the county’s businesses are low. We can help employers to understand exactly how the regulations affect them and what they need to do to action the new measures smoothly and efficiently.”
Designed to simplify and modernise the way PAYE payments are recorded, Real Time Information (RTI) will require almost all employers and pension providers to report their employees’ PAYE payments, including tax and National Insurance Contributions (NICs), on or before each pay day, as opposed to the end of each tax year. The introduction of RTI will also help to ensure the effectiveness of the Government’s new Universal Credits programme, which is set to calculate welfare claims and tax credits automatically on real time earnings.
The majority of employers and pension providers will join RTI from April 2013, with all employers adhering to the new system by October 2013. Employers will also need to request further details from their employees from April 2013, including their passport number.
Automated penalties for late ‘in year’ Full Payment Submissions (FPS) will begin in April 2014. Until then, the current penalty process will continue to apply at year end, with a penalty issued if the relevant information is not up to date by 19th May.
HMRC launched an RTI awareness campaign in October by writing to more than 1.4 million employers about the upcoming changes. It is encouraging businesses to prepare their PAYE systems by cleaning their employee data, seeking expert advice and considering potential changes to internal processes.
For further information or to understand how the new regulations will affect your business, please contact the payroll team at Whitley Stimpson on 01295 270200.