Within the next year HMRC are planning on making vital changes to the way business undertake their payroll, so if you have employees you will need to know what these changes entail. The biggest expected changes within payroll will be the move to real time information, commonly known as RTI. Planning for change is never easy, regardless of the software you have within your business, follow the checklist below to ensure your business and employees are ready for the big change.
Long gone are the days of manual book keeping, as the digital take over has revolutionised the way business manage their accounts. Now that many businesses are looking into cloud based solutions, working out sick days, statutory holiday hours, overtime and paying wages usually in cash or by cheque are now done within a few simple clicks of a mouse. No longer are businesses required to post paperwork or have multiple telephone conversations with the HMRC, as real time information is making the whole process streamlined through real time.
Manual processes as discussed above are fast being replaced in even the smallest of businesses. Automating essential accounting activities has provided businesses with the opportunity to reduce overheads and increase efficiency, all through the introduction of more computerised systems and software. Many of the leading industry accounting software systems such as IRIS payroll will provide you with the platform to provide any documentation required by the HMRC via digital means, hassle and stress free. The digital channels will create appositive impact on many duties related to payroll, however there can still be time lag situations when, for example, the HMRC require PAYE information on a yearly timescale – this can create a number of issues, especially for those who might also be in receipt of certain benefits.
As the changes come into play in 2013 the HMRC will be using RTI, which means employees they will be required to provide PAYE information at the same time as they would normally pay their staff. It seems that the other benefit from this is the creation a more accurate system for the payment of the PAYE. The belief is that that the system should reduce the amount of errors made by accountants, whilst ensuring that employees do not underpay on any tax. If errors do occur it seems that the HMRC are hoping that the RTI will be far more time efficient, hopefully reducing the stress, hassle frustrations within the accounts department.
Employees in the past have sometimes struggled with other work related benefits; the RTI will ensure that all payments are correct to reduce the amount of people being overpaid. The hope is that tax paying workers won’t see a rise in their tax brackets because of mistakes made by the HMRC or the business they are currently employed by.
Software & Systems
Many of the leading software companies are already RTI ready, most providers are working closely with the HMRC to ensure businesses make a smooth changeover onto the new system. Investing in future proof software can be difficult, but it’s advisable to speak to your current provider to see if they have the RTI in place or and update to your current system scheduled.
The HMRC will roll out RTI payroll from April 2013 and by October of the same year it is expected to be being used by all employers in the UK. Ensuring your current suppliers are ready for the switch is vital, information has not been released yet for non-compliance but its best to protect your business against any potential fines or penalties.
The HMRC are making it a requirement for all employees to digitally process any deductions associated with TAX or National Insurance as soon as they happen. Another expected requirement is to provide them with accurate working hours for all staff, every week, no longer will there be the requirement to send separate p45 and p46 forms across to the HMRC because the new system will have these incorporated within the new online submission process.
If a business undertakes any reporting they will be expected to carry it out via one of two methods – either through the new secure Government Gateway or an Electronic Data Interchange. There will be many business owners that have not yet checked compatibility with the new RTI system, it’s often best to bite the bullet and update your payroll software know rather than later to avoid the inevitable rush.
This helpful advice was provided by Karl Young.