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RTI payroll concession extended for micro businesses

A temporary easing of the Real Time Information payroll reporting requirements for ‘micro employers’ has been extended.

Rather than having to provide payroll information to HMRC every time employees are paid, small businesses are allowed to submit PAYE data on or before the last day of each month. This concession, which had been extended until April 2014, has now been further extended until April 2016, and is expected to affect around 85% of all the UK’s businesses.

What is Real Time Information?

From 6th April 2013, the majority of employers are obliged to report payroll data to HMRC in real time. The change aims to make HMRC more efficient at dealing with errors in a timely fashion, reduce fraud, and provide up-to-date employment data to the Department of Work and Pensions.

Rather than providing information at the end of each tax year via a P35 form, as had been the case for decades, employers or their agents (such as accountants) now have to let HMRC know about payroll data (including tax and NIC deductions) each time employees are paid. And this has to be delivered via payroll software which is compatible with the new RTI systems.

Regardless of the date of RTI submission, the dates upon which income tax and NI liabilities are paid to HMRC remain unchanged – the 19th or 22nd of the month or quarter following the payment reporting period.

How will the extension for micro businesses work?

Although HMRC reports that 93% of employers are reporting payroll information each time employees are paid, it is clear that many businesses need more time to adapt to RTI. This extension applies to the majority of small businesses in the UK – those with nine or fewer employees.

From the start of the 2014 tax year (6th April), all employers (aside from the ‘micro’ ones mentioned above) will be required to report payroll data each time they pay their staff.

Alongside the extension, HMRC have announced further measures to help micro employers adjust to the new RTI payroll regime, including improved guidance (such as best practice scenarios), and ongoing work with software suppliers to develop new technology to help businesses comply with RTI.

Commenting on the announcement, Paul Aplin, from the ICAEW Tax Faculty said; “Small businesses are the lifeblood of the UK economy. At a time when they need support to drive economic growth, I would have preferred to see the existing easement, that includes businesses with fewer than 50 employees, extended beyond 5 April 2014.”

Further Information

Visit HMRC’s Real Time Information home page which will (hopefully) enlighten you further.

The accountancy industry has set up a useful portal – PayeRTI.org.

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