February 21, 2013 | By Nimbus |
PAYE & RTI – A new way of working:
Being creatures of habit, there is a natural reluctance to change the way we do things. Every UK employer is an unpaid tax collector and from April there is yet another rule which must be followed. Real Time Information (RTI) is HMRC’s latest innovation to keep track of employees during a tax year, ensuring that the Tax and National Insurance deducted from employees during the year is paid to HMRC as and when it is collected by the employer.
Historically, the system allowed scope for the cash strapped employer to delay PAYE payments during the course of the year – not really in the spirit of the tax system, but the temptation was there and it offered an option that was far cheaper and easier than going to the bank and getting an overdraft. As long as the payments were all in by the time the year end P35 was submitted, and it all reconciled, HMRC would be none the wiser. So RTI will put a stop to that and will mean that the PAYE system that all employers operate will be far more regimented.
So how will the changes affect the employer? The simplest way to explain this is to identify some key areas that will make sure you are complying with the new regulations by April:
1. Ensure your payroll software is up to date
2. Check you have all you employees details up to date
3. Verify you have registered for PAYE online
4. Ensure that hours worked are recorded for each employee
5. Update your payroll software to include all casual staff that previously were not included in the software
6. Prepare to run the payroll each time an employee is paid, including hours worked
7. Ensure starters and leavers are up to date
If you are reading this because you run your own payroll, or your accountant has not told you about RTI, perhaps it is time to think again. At Nimbus Accounting we engage in a constant dialogue with our clients to ensure they are kept up to date with changes that will impact their business and include unlimited contact in our fixed fees. If you would like to discuss this or any other accounts or tax questions, please feel free to get in touch on 01273 782 712 and speak to one of our qualified accountants.