PAYE real time information pilot
Further details on HMRC’s plans to collect PAYE information in ‘real time’ have been announced. Currently the major updates to the PAYE system take place when annual employer returns are submitted. HMRC’s plan is to move to a system where employers send HMRC information about tax and other deductions from employees’ pay when the employee is paid, rather than at the end of the year as at present.
HMRC have confirmed that a real time information pilot will commence in April 2012 with volunteer employers and software developers with the aim that all employees will be submitting real time information by October 2013.
HMRC have highlighted the following benefits to collecting information in real time:
- Annual employer returns will be phased out, reducing costs for HMRC and employers.
- HMRC will use the real time information to update records when a taxpayer changes employer removing the need for employers to separately send forms P45 or P46.
- HMRC will have the real time information needed to support the Government’s welfare reform agenda.
- HMRC will be able to help prevent and detect errors and fraud within the welfare and PAYE systems.
- HMRC will not need to wait until year end to identify underpayments by employers and collect those debts.
- In some circumstances, HMRC will be able to adjust employees’ tax codes in year to reflect their changing income and therefore, over time, reduce the need to send employees repayments or bills after the end of the year.