HMRC: RTI Will Save SMEs £300 Million
HM Revenue & Customs (HMRC) say that the introdution of the new Real Time Information (RTI) scheme will save businesses £300 million.
The new regime, which goes live in April, sees employers having to change their PAYE reporting from once a year to every time an employee is paid.
Whilst businesses have been arguing that either they are unaware of the scheme or what to do or even that they believe it will be more complex than the current scheme, HMRC say otherwise.
According to HMRC the new RTI system is the biggest tax reporting change in 70 years with the current system being branded as "not fit for purpose".
The tax man also believes that RTI will be better for employers, better for employees and be better for the country as a whole.
Employers will apparently be saving a collective £300 million by the reduction of administration costs, chiefly what HMRC calls the extensive annual tax return.
Lin Homer, the Chief Executive of HMRC, said:
"Businesses should act now to be ready for April, when RTI comes in. PAYE directly affects every employee in the country and that is why it is vital that it reflects, on time and accurately, the tax circumstances of the millions of employees who depend on the system to get their tax right."
"RTI delivers on all fronts. Business costs will be cut by £300 million a year, employees will be taxed more accurately and fraud and error in the tax credit system will be reduced by hundreds of millions of pounds every year."
RTI, which was first announced in September 2012 and then piloted in November last year, has come under fire from the Forum of Private Business (FPB) who say that many small businesses are still unaware of the changes to the tax regime.
HMRC has said that it is writing to all employers this month highlighting the changes and informaing them of their duties under the new system. Records will supposedly be more accurate and current and will reduce the instances of overpaying and underpaying tax.
Small businesses needing to know more about RTI changes to PAYE should see HMRC’s webpage Real Time Information – improving the operation of PAYE and the HMRC video Real Time Information – What it Means for Employers.