‘Real time’ PAYE rules eased for some employers

HM Revenue & Customs (HMRC) is to give some employers extra time to submit PAYE data in real time.

Real Time Information (RTI) reporting of PAYE information will take effect in April 2013, when employers will need to start sending PAYE information electronically to HMRC, either on or before the date the payment is made.

HMRC announced on 12 November that stakeholders it is working with had demonstrated that in a small number of cases, reporting information in real time would be difficult or impossible.

Now it says that it will allow up to seven days to report PAYE information where:

  • payments are made on the day of work, where payments vary depending on the work done and it is impractical to report in real time, such as:
    • a crop picker paid in cash at the end of the day, when their pay is based on how much they have picked or
    • a casual worker in a pub paid at the end of the night
  • payments are made to employees for whom employers do not have to maintain a Deductions Working Sheet (form P11).

HMRC said there would also be extra time to report payments of benefits and expenses subject to Class 1 National Insurance contributions but not taxed under PAYE.

These can be reported the next time the regular payroll is run, or 14 days after the end of the tax month the payment was made in, whichever is earlier. HMRC said it would also issue further guidance, including on the reporting of ad hoc advances of pay.

Meanwhile, the Institute of Chartered Accountants in England and Wales (ICAEW) warned that despite the changes, it had serious concerns over the impact of RTI on smaller businesses.

Frank Haskew, head of the ICAEW’s Tax Faculty, said: “The ‘on or before’ rule, even as amended, completely ignores the way the real world works. It will add significantly to compliance costs and burdens for many small and medium-sized businesses.

“Even if all employers complied with the ‘on or before’ requirement, it is difficult to see how HMRC could reconcile easily all the information it would receive. We therefore propose that there should be a single RTI return on the 19th of the month following the month of payment – this is the same as the normal PAYE due date and will be familiar to all employers.”

Link: RTI information