The government’s decision to introduce 'real time' reporting for PAYE has resulted in an HMRC consultation.
Among the proposals is a requirement for employers to submit details of staff pay and deductions to HMRC with each wage packet, rather than just at the end of the tax year. It is suggested that this will improve the accuracy of the PAYE system and reduce administrative burden for both HMRC and employers by eliminating the need for end of year returns and starter and leaver forms.
However, a further reason is that it will allow real time information to go to the Department of Work & Pensions. In turn, that will help the DWP calculate entitlement to the new Universal Credit entitlement, which will replace all working age benefits and tax credits.
HMRC suggests that 90% of employees are paid by BACS. It's therefore proposed that BACS will become the main method for sending real time information. If that is not how you pay staff, it will be necessary to submit the data through an internet channel. For smaller businesses it is proposed that the move to real time information will commence from October 2013, in time for the introduction of the Universal Credit.
What do we think?
The NFU has already raised a number of concerns regarding the proposals and timescales suggested, and we've also made a formal submission to the consultation, which members can read by clicking on the link to the right of the page.
We're concerned about the implications for small rural businesses and, in particular, have questioned the practicality of submitting real time information for businesses with limited or no broadband access. We have also highlighted the potential administrative burden and cost implications of a significant increase in reporting requirements for smaller employers.
How can you help?
We would be interested in examining the extent to which BACS payments are currently made by members and if there are specific technical or financial issues which prevent its wider use.
If you would like to contribute then please complete our survey - here.
Specific points can also be raised with Michael Parker, Head of Tax on 02476 858722 or by email at michael.parker@nfu.org.uk
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