Business in the dark about PAYE, says York expert
A York expert says it is “deeply disturbing” that more than four in every five small businesses is unprepared for the forthcoming revolution in the PAYE system.
Lorraine Young, (pictured right), the payroll manager at Garbutt & Elliott, was responding to a study by Crunch Accounting, which also revealed almost half (46 per cent) of companies said they had never heard of the new system, one in three said they were only “vaguely aware” of major changes, while 81 per cent admitted to being unprepared for it.
“These new statistics are deeply disturbing. They clearly show that despite HMRC’s claims that their communications campaign for RTI is on track, there’s still not enough information from the Government about this huge change to the payroll system,” said Ms Young, who is based at Garbutt & Elliott’s Monks Cross head office.
“To put it bluntly, companies will face chaos if they are unprepared for the revolution in the PAYE tax system, which comes into force in April.”
The 2013/14 tax year sees the biggest change in the PAYE system since its introduction in 1944 and all employers will be affected.
The change sees the implementation of Real Time Information (RTI) on April 6. Under RTI, information about income tax, National Insurance Contributions (NICs) and other deductions due under PAYE must be submitted throughout the year as part of the payroll process, rather than at the end of the year as they are now.
The 2012-13 payroll information should be submitted as normal.
Every time the payroll is processed, the PAYE software will collect the necessary information and send it to HMRC online “on or before” the pay date.
Lorraine Young said it was crucial that employers were completely up to speed with RTI. “Every employer must ask themselves whether they are absolutely sure that they have put the necessary changes in place to ensure compliance with the new regulations.”
HMRC will no longer require the end-of-year Employer Annual Return forms P35 and P14 and they will no longer require submission of forms P45 or P46. Instead, the information will be reported in real time.
“Although the implementation of RTI has been described as a staged process, almost all employers and pension providers will be required to operate RTI from April 6 2013, with very few exceptions. If all this sounds very complex, then one option is to outsource your payroll,” said Ms Young.
“Large employers with schemes of 5,000 or more individuals may defer implementing RTI, if they have not been able to get their systems in order but this only by agreement with HMRC, who will agree a later implementation date. However, this cannot be later than October 2013 as this is the start date for Universal Credits.”
A small number of other non-standard PAYE schemes will continue to use existing paper arrangements until April 2014. These are employers with religious objections to electronic communications and users of the special schemes for examination fees, electoral payments, direct payment and direct collection schemes (where an employee reports their own PAYE).
Please contact Lorraine Young, Payroll Manager on 01904 464100 or by email [email protected] for further information.