HMRC confirms changes to PAYE system

HM Revenue and Customs (HMRC) has confirmed that Real Time Information (RTI), a new system that will improve the operation of pay as you earn (PAYE), will go ahead.

Following consultation, HMRC confirmed that a pilot will begin in April 2012 with volunteer employers and software developers. It will work to ensure data quality will begin from October 2011 and continue until all employers have moved to the new system successfully.

Subject to successful completion of the pilot, employers will be required to start using the RTI system from April 2013 and all employers will be using the RTI system by October 2013. HMRC will also invite software providers and their clients to participate in the pilot.

The aims of RTI are: to make it easier to ensure employees pay the right tax after a change of job and remove the need for the P45/P46 process over time; offer the prospect of simplifying the PAYE end of year reconciliation process for employers and HMRC; remove much of the uncertainty that leads to errors in the tax credits system; and support the introduction of the universal credit from October 2013.

David Gauke, exchequer secretary to the Treasury, said: “Real Time Information will support improvements to the PAYE system making it more accurate for taxpayers and easier for employers and HMRC to administer.

“We need a PAYE system that can meet the demands of the 21st century workplace and ensure that the tax system works better.”

Stephen Banyard, acting director general personal tax at HMRC, added: “We wanted people who use the system every day to give us their views on the collection of Real Time Information.

“We have listened to the concerns of payroll providers and employers surrounding the proposed mandation date and amended our plans to take these into account.

“We want to work with software developers and employers to help us deliver the new system. I urge anyone interested in being involved in the pilot to contact us.”

Karen Thomson, associate director of policy, research and strategic visibility at the Chartered Institute of Payroll Professionals (CIPP), said: “Real Time Information is the biggest change to PAYE reporting since its inception.†

“The CIPP welcomes the revised timetable which allows more time to get this right and to ensure a smoother launch.”

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