PAYE forms go online
PAYE forms to go online in 2013
Current problem:
Employers are required to file an annual PAYE return (P35 form) with HMRC giving details about their employees' earnings during the tax year, along with information about the amount of income tax and National Insurance contributions (NICs) that has been deducted from the employees' salaries. This return is due on 19 May, after the end of the tax year to which it relates.
The return is not filed until after the end of the tax year but salary payments and deductions are made on a monthly basis during the tax year, so using the current system, any errors made in the PAYE code (leading to incorrect amounts of income tax being paid) are not uncovered until some time after the end of the tax year.
Solution:
Under the real-time information (RTI) system, it is proposed that employers and pension providers will file PAYE returns online every month (instead of filling out the paper P35 form) so there would be no complications arising from submitting information after the tax year.
When will it be live?
A pilot programme will run from April 2012. All employers will be expected to apply RTI from October 2013.
What are the benefits?
The government believes that RTI will make the PAYE system more accurate for individuals, resulting in fewer bills and repayments being sent after the end of the tax year. Any reconciliations can be performed - and PAYE codes corrected where necessary - in real time.
What are the disadvantages?
Employers will suffer the main disadvantage, particularly smaller employers that may struggle to meet the necessary software and administrative costs to convert to electronic processing of payroll data.
Submitted by MSB Accounting on Friday 27th January 2012