RTI Hurdles to Get Over

Real Time Information a burden to small business

Last week HMRC published guidelines relaxing a number of Real Time Information (RTI) conditions following a number of serious concerns expressed by the Chartered Institute of Taxation (CIOT) and other bodies.

Although the CIOT welcomed the news that HMRC are willing to slightly relax the requirements for employers to submit PAYE information in 'real time' it warns that many businesses will still be faced with significant financial and administrative burdens.

As from April of next year most employers will be required to start sending PAYE information in real time 'on or before' the date payment is made. This could mean that many employers will need to submit payroll information on a weekly basis and force them to outsource their payroll function to help them cope with the added strain. As a result small employers could see their typical annual cost rise from around £250 to £1,000 approximately.

With the final test phase of RTI already underway HMRC announced that it would make life a little easier for employers by allowing extra time, up to seven days, to report PAYE information where:

(a)  payments are made on the day of work which vary depending on the work done, where 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

(b)  payments are made to employees for whom employers do not have to maintain a Deductions Working Sheet (form P11).

There will 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 will publish draft regulations for comment in mid-November.

The CIOT remarked, “The issues go beyond costs. Most employers, including larger ones, will actually find it impossible to deal with elements of the 'on or before' requirement.”

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