Many small and medium sized businesses are still unaware of major changes to the PAYE system due to come into effect this spring that will dramatically change the way they pay their staff, a North Yorkshire accountancy firm has warned.
The new system has been described as one of the biggest ever overhauls of payroll operations and will affect all employers regardless of size or number of employees.
The Real Time Information (RTI) system will bring together payroll and payment processes into one combined unit and is designed to ensure employers report payroll details to HMRC on or before every payment of earnings to employees rather than annually, as happens now.
Sally Thomas of Harrogate accountancy firm Saffery Champness explained:
As part of the new “Real Time Information” system, employers will be legally required to submit electronic returns of payroll data to HMRC each time they pay their employees rather than sending a separate return at the end of the year.
She said one of the key features of the reporting under RTI was the level of detail that would be required for each employee.
Sally Thomas added:
The onus will now be on businesses to know the names and addresses of employees, as well as dates of birth and National Insurance numbers.
In addition, there is a requirement to report the number of hours, in bandwidths, each employee is contracted to undertake.
Employers accustomed to making anonymous payments for casual labour will need to upgrade their systems to cope with new requirements from HMRC.
There are no get-out clauses and the new rules apply to everyone, regardless of business size, that takes on casual labour for however short a period.
While the new legislation does not come into force until April we are advising all clients to have the systems in place to manage the new rules well in advance to ensure they can continue business as usual.
She said one area that was giving cause for concern in some sectors, such as hospitality and agriculture, was where employees are often paid daily and in cash although there are some relaxations for casual labour.
HMRC guidance for employers specifically warns against making up personal information, with heavy penalties for non-compliance.
Saffery Champness will be holding a seminar to provide more detailed information on RTI and how businesses can prepare. Areas covered will be an overview of RTI, areas of difficulty, experience to date, software issues and penalty proposals. The event is being held on February 15 from 8.30am to 10.30am. Places are free but limited. To book contact Saffery Champness on 01423 568012