New PAYE reporting system in place from April 2013

The way that employers report Pay as You Earn (PAYE) details to HM Revenue & Customs is set to change in April next year with retailers able to pay in real time from the date with the new Real Time Information (RTI) solution.

Under the present PAYE system, employers tell HMRC what deductions they have made from employees’ pay at the end of the year. Reporting PAYE in real time will ensure that employees’ tax records are accurate, so they won’t face big PAYE overpayments or underpayments at the end of every tax year.

It will also provide accurate records on wages and tax for the forthcoming Universal Credit, so eligible employees will get the right amount of benefits or tax credits every month.

Instead of sending all PAYE details to HMRC in one go, at the end of the year, from April 2013 employers will have to electronically send details every time a payment is made using payroll software as part of the normal payroll process.

It is anticipated that by getting rid of employer annual returns and streamlining the starter and leaver processes, RTI will remove admin burdens from businesses of around £300m each year.

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