Real Time PAYE Pilot Launched

Real Time Information (RTI) PayrollHM Revenue & Customs (HMRC) is pressing ahead with changes to the PAYE system in the form of the new Real Time Information (RTI) PAYE.

With the Real Time Information changes announced in September, a pilot scheme is going ahead with as many as 250,000 employees lined up to take part. The pilot will run between now and March 31st 2013.

RTI is a radical change to the current PAYE system meaning that employers will be able to electronically send their PAYE data to HMRC each time employees are paid and not just one time at the end of the year.

HMRC believe that the new regime will reduce the administrative burdens of the payroll process, saving employees nationwide an estimated £300 million every year.

HMRC’s Director General Personal Tax, Ruth Owen, said of the trial RTI scheme:

“The pilot continues to go very well and remains on track. We started with just 10 employers in April and now have over 1,800 PAYE schemes successfully submitting PAYE returns in real time, with more than 1.97 million individual records.”

Owen has urged businesses to ensure that they are prepared for the new RTI system by making sure that all employee records are accurate and up-to-date and that firms’ payroll software will be ready to handle Real Time Information.

There is, however, one major issue with the new scheme – According to payroll software provider Sage UK as many as one quarter of the UK’s small and medium-sized enterprises (SMEs) are unaware of the existence of RTI.

Furthermore, Sage UK believe that one third of SMEs are unsure of the impact that RTI will have on their businesses.

According to the October 2012 Sage Omnibus of over 1,000 small and medium-sized businesses half of those firms don’t even know when the Real Time Information changes come into effect.

Lee Perkins, the Managing Director of Sage UK’s Small Business Division, said of the upcoming changes:

“RTI represents the biggest change to PAYE reporting for over half a century and it will affect the way every business does things. HMRC is currently working hard to put it on the radar of everyone, but if you’ve not heard from your payroll software provider on RTI by now you need to be asking some serious questions about their readiness for it.”

The Institute for Chartered Accountants in England and Wales (ICAEW) is less positive about RTI. The organisation is of the opinion that many businesses will find the new reporting system “impossible”.

Frank Haskew, ICAEW’s head of Tax Faculty, voiced this opinion:

“We are particularly concerned about the impact this will have on smaller businesses, which are the lifeblood of the UK economy and essential if the UK is to continue to grow.”

Haskew cites a couple of examples where small businesses might find RTI either difficult or impossible, including low-paid workers receiving salary advances before pay day and when temporary workers are drafted in on an ad-hoc and emergency basis to help out enterprises.

The ICAEW’s concern is that RTI payroll notifications would have to be made ”within 7 days” of payment rather than reconciled into a monthly filing saying that the new tax regime “completely ignores the way the real world works.”

The ICAEW have proposed that HMRC have a single RTI return date each month.

Sage have already updated their payroll software, the Sage 50 Payroll RTI Edition, based upon the feedback of some 4,000 customers who are already involved in the RTI pilot scheme.

For further information see HMRC’s dedicated information for employers on the introduction of reporting PAYE in real time and what you need to do over at

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