Annual PAYE
RTI is a significant burden for many one-person and family companies. A way to reduce the costs of RTI administration is to pay the owner/directors just once a year, and apply for the PAYE scheme to be an annual scheme. You can do this by contacting the taxman’s payment enquiry helpline on 0845 366 7816.
HMRC will register the PAYE scheme as an annual scheme if it meets these conditions:
- all the employees are paid just once a year on the same date; and
- the employer is only required to pay HMRC annually (ignoring Class 1A NIC).
Once the PAYE scheme is registered as ‘annual’ you can send in a FPS (full payment summary) for the month in which the employee(s) are paid, and indicate that is the final submission for the tax year. You then don’t have to submit nil EPS (employer payment summary) returns for the other 11 months of the year when no payments are made.
However, there has been a little problem. Since the start of RTI the registration of PAYE schemes as ‘annual’ has not been fed through to the RTI system. This will be fixed soon, possibly by the time you read this. In the meantime you have to submit nil EPS returns for every month when employees are not paid. If you haven't paid anyone yet, it's not clear what HMRC will do about it.
If your PAYE scheme was registered as ‘annual’ before the start of RTI you should be in the clear. Nil EPS forms will not be required for the eleven months of the tax year in which no one was paid.