PAYE shake up begins

Employers across the UK have started reporting employee PAYE information to HMRC in real time, hailed as the 'biggest shake up' of the PAYE system in nearly 70 years.

The transition to the new real time information (RTI) system began on 6 April. By October 2013, all employers will be required to report employee earnings and National Insurance contributions on or before each pay day, as opposed to at the end of each tax year.

Designed to modernise the PAYE system and to support Universal Credit - a streamlining of the welfare system - HMRC said RTI would be 'quicker, easier and more accurate.'

David Gauke, exchequer secretary to the Treasury, said: "For employees, particularly the one million people in the UK with multiple jobs, RTI will bring benefits as HMRC starts to get details of their tax every time their wages are paid, rather than just once a year. This will make HMRC's records more accurate and up-to-date and will reduce the number of cases where someone is found to have under or overpaid tax during the year."

HMRC recently announced that smaller employers will be given some leniency in adapting to RTI, following a Parliamentary Committee report which raised questions about whether the new system would be fit for purpose and ready for its full implementation later in the year. Until 5 October, employers with fewer than 50 employees will be able to send information to HMRC by the end of their regular payroll run, provided it is no later than the fifth of each month.

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