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Real Time PAYE

More than 1.4 million employer PAYE schemes are now reporting to HM Revenue and Customs (HMRC) in real time since the launch of new tax reporting requirements in April.

This means that more than 83 per cent of small to medium firms and more than 1 million (77 per cent) micro employers have already started to report PAYE in real time, and that information about 44.5 million payments made to employees between 6 April and 5 May was successfully reported online to HMRC.

After listening to stakeholders, HMRC has today announced that it will be seeking to extend the temporary relaxation of the new reporting rules for businesses with fewer than 50 employees from October 2013 until April 2014, and that this relaxation will come to an end at this point. The extension means that businesses will not be required to change their approach halfway through the tax year.

The relaxation has meant that these businesses are still required to report through the new system, but are able to do so once a month, rather than each time they pay their employees. This gives small businesses that pay weekly (or more frequently), but who only run their payroll at the end of the month, some extra time to adjust to the new requirements.

From April 2014, all employers need to plan to be reporting in real time, but HMRC is continuing to work with businesses over the coming months to identify whether there are any specific circumstances with on-or-before reporting that it needs to cater for in the longer term.

PAYE information reported in real time is already being used by the Department for Work and Pensions (DWP) to calculate Universal Credit amounts paid to people in its pathfinder pilot in the north west of England, ensuring the amount of benefit accurately reflects their level of income.

Exchequer Secretary to the Treasury David Gauke said:

“This is the biggest reform of PAYE since its introduction nearly 70 years ago and we are bringing the system into the 21st century. The transition is going well, and the vast majority of employers are now reporting their PAYE information in real time, meaning that HMRC’s records are becoming more accurate and up-to-date.  DWP is already using the new system to underpin its Universal Credit pilot, helping it to be more responsive to changes in claimants’ income levels. This is all good news, but we will continue to listen to and work with businesses to ensure that all employers are reporting in real time by April 2014.”

HMRC’s Director General for Personal Tax, Ruth Owen, said:

“The roll-out continues to exceed our expectations. I am delighted that 83 per cent of SMEs and 77 per cent of the smallest businesses are already on board. We will now write to the minority of employers who are not, to establish how we can help them meet the requirements of reporting in real time.”

Interviews with employers reporting in real time can be seen on YouTube at http://youtu.be/rvARhqrjqpI