In the last few months, most employers have been reporting payroll information to HM Revenue & Customs in real time, following the introduction of Real Time Information. A trial took place with voluntary companies prior to its roll out but since April, most employers have successfully enrolled. However, companies which have fewer than 50 employees and may make payments at irregular times, perhaps weekly or fortnightly, have until April 2014 to adapt their systems for RTI.
This relaxation of the legislation applies to companies which pay employees manually, either on a weekly or fortnightly basis, and then provide that information to their accountant or payrolling provider on a monthly basis. Pay As You Earn still has to be reported to HMRC in real time by submitting information by the end of the tax month in which the payments were made. A tax month runs from the 6th of one month to the 5th of the next.
Businesses which are considering employing staff will have to prepare for Real Time Information, as many of the PAYE processes have changed. You may be able to use commercial payroll software or outsource to an accountant or payroll provider. Register for PAYE Online so you can submit information to HMRC.
When you have new employees, you will require basic information from them before they can be paid – this is then reported to HMRC. You will need the person’s name, address, date of birth, gender, the date employment commenced and the correct National Insurance number. You need this information for every employee, no matter what hours they work or how much they earn, as all payments have to be reported properly.
Inform HMRC when you send your first Full Payment Submission. The important information you will need, like pay, tax paid to date and the tax code which has been operated, can be found on the form P45 from the last employer. If no previous P45 is held, you have to ascertain the employment situation of the individual. The categories are the same as those used on a form P46, which would’ve been completed by any employee without a P45. All the information of a new starter is reported along with the Full Payment Submission.
It is important to get ready for April 2014 if you have fewer than 50 employees, or to prepare when you start a new business if you intend to have a workforce.
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