Small Businesses Must Prepare For Real Time Information (RTI) In 2013

RTI is a new system introduced for the employers and pension providers by HM Revenue and Customs to report pay, tax, national insurance contribution and other details each time the payroll is processed weekly, fortnightly or monthly. From April 2013, it will be mandatory for all employers with less than 5000 employees to make RTI submissions online with large employer migrating to the system before October 2013. Previously, all employers were required to submit a P35 or P14 at the end of the tax year. With the introduction of RTI submissions being sent each pay period, HMRC will no longer require this end of year information after the 12/13 year end and can instead keep track of all legislative processes in ‘real time’. Although P35 and P14 forms are being replaced by your RTI submissions, P60 forms are still required to employees at the end of each tax year as well as P11 forms.

HMRC have identified certain information about employees that is critical to RTI. An employer will not be able to make RTI submissions to HMRC without providing the employee’s surname, forename, gender, date of birth and working hours. The address is also mandatory for new starters but not existing employees. The employee’ NI number is desirable, however not knowing the NI number for some of your employees will not prevent submission to HMRC. With regard to company data, the employers have to make sure the district number, PAYE reference number and PAYE account office reference number are correct.

Your payroll system will need to be upgraded with all the requisite data items and the ability to produce cross reference and hashes to accompany both the RTI submission and the payment itself. You need to liaise with your payroll software provider and ensure they understand the timescales and expectation for the upgrade since the employer will be mandated to comply with RTI submission and penalised by failing to do so. You also need to liaise with your payments provider and ensure they have an RTI compliant Bacs system in order to minimise the disruption.

From April 2013, RTI will become compulsory for most business. This will require monthly online submission of ‘real time’ payroll information to HMRC. Small business and limited company contractors will need to update their payroll systems to ensure they are compatible with the new RTI requirements. Belsize Accountancy offers payroll solutions to our clients. Feel free to contact us on 0207 043 0052.

Sterling Weakens After Speculation Over EU Exit

Sterling continued to come under broad selling pressure yesterday reaching a fresh low of 1.2008 against the euro. Recent data suggesting a weakening UK economy increases the chance of more quantitative easing (QE) and a possible credit rating downgrade in the coming months. This paired with new speculation on whether Britain will remain in the EU has caused Sterling to be the worst performer in the G10.

The US market also faces the prospect of further monetary easing. Federal Reserve Chairman Ben Bernanke has said he still wasn’t satisfied with the economy’s progress, despite recent signs of improvement, and indicated that he plans to stick with the unconventional programs the central bank is using to lift output. In a recent quote to the media, Ben Bernanke said “I want to be clear that while we’ve made some progress there is still quite a ways to go,”. The Fed has said that continuing these programs such as the $85 billion-a-month QE program hinges on progress in the US job market.

European Companies Undervalued

Shares in European Companies remain cheap compared to other markets yet they continue to be avoided by investors over fears of a Euro devaluation. Mario Draghi’s recent promise to “do whatever it takes” to save the Euro helped European stocks to rally in mid 2012. Also, the intervention of the European Central Bank to bailout ailing European banks and to promote a Banking Union, has helped to reduce the borrowing costs of debt laden countries like Greece and Spain. Nevertheless, the prospect of bank runs and a devaluation of the Euro remain real prospects as many fear that some of the Spanish banks in particular have built up unsustainable losses.

However, despite these problems, the Eurozone offers a wealth of profitable companies who are in good financial health. European companies have improved their balance sheets in recent years and hold near record levels of cash. At the same time they have been paying off debt, leaving them in a strong position to finance growth and making them more resilient to downturns in the market.

Negative sentiment in the European markets has created plenty of opportunity for investors to purchase assets at bargain prices. Investing in Europe could present significant opportunities depending on your view of prospects for the Euro maintaining its value.