What does the RTI system for PAYE mean for you?

As you will all probably be aware there are substancial changes being made to the PAYE system. These changes are fundamental, and if you complete your own payroll it is crucial that you understand what these changes are and what they will mean for your business.

The aim of the new system is to reduce the need for end of tax year reconciliations. Every time that an employee is paid within your business, all the details have to be reported to HMRC. This should make it easier to work out the right amount of tax and national insurance that is to be paid, and to make sure it is paid at the correct time.

There are many changes that will come into force with the new RTI scheme. Any employees that are being paid less than the current earning levels must have all details of their earnings reported, unlike under the current system. Additionally to this payrolls for any domestic staff will no longer be able to be processed under a simple scheme, which will mean extra complications for employers. Many believe the new RTI system is being enforced so that when the new universal credit benefit scheme is launched in late 2013 HMRC can work off up to date earning information. HMRC stand by their belief that the new RTI system should give savings to employers in the future, however there will be initial set up costs when switching to the new system.

Savings by employers when completing forms will arise, as no annual form P35 or P14s will be needed, but forms P60 and P11D will still have to be completed and filed. For all employers up and down the UK, you will have to switch to the new system by October 2013. Most employers will be able to start migrating by April.

This means that all employers will have to start thinking about what this change will mean for them. This is of course unless you are already a client of Gordons Knight, and we currently handle your payroll. For these clients we will make all necessary changes for you, and will be able to talk and advise you through any steps you will have to take internally.

If you are not one of our clients, and you have questions about what this change to RTI means for you then please contact us on 0208 241 3000.