Time for Real Information
Most employers will have to report their payroll data to HMRC under Real Time Information (RTI) from 6 April 2013. This will mean making a report every time employees are paid, not just at the end of the tax year, or when PAYE deductions are paid. There are plenty of myths circulating about RTI – here are a few:
‘RTI will apply to self-employed earnings.’
No. RTI only applies to payments made to employees. The self-employed will continue to report their income annually to HMRC in their self-assessment tax return. But where a self-employed person claims Universal Credit from October 2013 they will have to report their income online on a monthly basis.
‘RTI doesn’t apply to workers who don’t pay tax.’
Yes it does. Where an employer runs a payroll and makes at least some deductions under PAYE, the details of every person paid through that payroll must be reported under RTI, irrespective of how little an individual employee is paid. There are some exceptions for employees aged under 16.
However, if all the employees on the payroll earn less than the lower earnings limit (£109 per week for 2013/14), the employer is not required to operate a PAYE scheme, and RTI reporting is not required.
‘I need to get passport numbers for every employee.’
No. Employers only need to retain a passport number where that information is collected as part of a check that the employee is entitled to work in the UK. A UK national insurance number and full name is usually sufficient to identify an employee.
‘The taxman will chase up late payers of PAYE.’
Currently the taxman doesn’t know how much PAYE is due to be paid each month or quarter, so will issue estimated demands if no PAYE deductions have been paid over. Under RTI he will have accurate information on payroll deductions as soon as the employee is paid, so can chase up underpayments of PAYE very quickly. This will put an end to the trick of paying a small amount of PAYE every month with large payment after the tax year end to agree with the deductions reported on the P35 form.
If you have concerns about how your business will cope with RTI, please talk to us.
