RTI Introduction Date Is Looming: Speak With Your Accountant If You Need Further Advice.

HM Revenue & Customs is ordering companies to buy or update payroll software.

This is so that they will be ready to cope with the impending introduction of Real Time Information (RTI) reporting from 6 April, 2013.

Letters will be sent to employers this week from HMRC telling them what they need to do to get ready for the introduction in April of RTI, which it claims will be the ‘biggest reform of business tax reporting in 70 years.’ Under RTI reporting, every employer in the country will move to a new way of reporting tax and national insurance deductions from employees’ wages and salaries. RTI, HMRC claims, will update the PAYE system so that it is ‘quicker, easier, and more accurate’.

HMRC maintains that the savings for business will total more than £300 million in reduced administration costs once the system is fully operational.

Employers will benefit from ‘much simpler’ requirements for reporting to HMRC, and from the abolition of the extensive annual tax return that the old PAYE system required.

RTI it is claimed will also bring benefits for employees, particularly the million people in the UK who have more than one job, because HMRC will get details of their tax every time their wages are paid, rather than just once a year. This will consequently make HMRC’s records more accurate and up-to-date, so it will begin to reduce the number of cases where someone is found to have overpaid tax during the year. However, it will also highlight those cases where employees have underpaid tax.

The government’s planned introduction of the Universal Credit system in October, 2013, which will be underpinned by RTI will ensure that the system is responsive to individuals’ changing circumstances”, HMRC added. HMRC said RTI will increase the accuracy of Revenue’s information about tax credits claimants, enabling better detection of fraud and error in the system and potentially saving the UK hundreds of millions of pounds. However, the Parliamentary Public Accounts Committee (PAC) has claimed that the government’s planned Universal Credit system will make it very difficult for small firms and the self-employed to keep up on the technology front. In a report on means-tested benefits and the effect of the Universal Credit plan, the PAC said small firms “will find it hard” to integrate with new systems.

Lin Homer, chief executive of HMRC, however, was more optimistic claiming:

“RTI delivers on all fronts. Business costs will be cut by £300 million a year, employees will be taxed more accurately and fraud and error in the tax credit system will be reduced by hundreds of millions of pounds every year.”

Small businesses can download free software to help them get ready for the new system in April. HMRC is also offering free software for employers with nine or fewer employees.

For further information about RTI, ring Steven Glicher accountants, or go to the HMRC website.

News / Blog

17th
May

The Latest Increase of the National Minimum Wage and National Living Wage

Last month saw the jump of over 2 million people receiving a pay rise after the national minimum wage increased…

11th
May

Starting up a Small Family Business

Choosing to start a Small Family Business is feasible alternative to starting a small business on your own, and it…

10th
May

12 Financial Mistakes Made by Most Entrepreneurs

Believe it or not, even the most successful entrepreneurs often make mistakes with their accounting that could potentially leave them…

26th
April

Writing a Successful Business Plan

Business plans are not just useful for finding funding for finance for a start-up business. A business plan can help…