The HMRC will introduce a new way of reporting PAYE for employers. The Real Time Information (RTI) Scheme will change the way in which employers and pension providers will submit their PAYE details to the HMRC.
Under RTI, information about PAYE payments will be submitted each time a payment is made as part of the payroll process rather than at the end of the year as it is now. Employers will submit their RTI returns to the HMRC online every time an employee is paid and effectively provide real time information to the HMRC enabling earlier reconciliations of each individual’s tax rather than waiting till the end of the tax year.
RTI is expected to provide more accurate tax deductions for individuals and generate fewer tax bills, corrections and repayments after the fiscal year end. However, employers are likely to bear higher costs with the possibility of new software and staff training. Employers are advised to bring their payroll records up to date in advance of moving to RTI.
RTI is effective from April 2013 for most employers. All employers will be required to report RTI by October 13. Employers will no longer be required to submit a P45 of P46 once RTI is implemented.