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19 Feb 2013

RTI PAYE start dates clarification

HMRC have confirmed that by April 2013 almost all employers and pension providers will be migrated to the RTI system. Most will have to commence RTI reporting from the start of the new tax year in April 2013, reporting payroll information to HMRC online on or before the payroll payment date.

HMRC have previously stated that they: ‘remain on track for all micro, small and medium-sized employers and most large employers and payroll bureaux to begin sending payroll information to HMRC in real time in April 2013, and for all employers to be routinely reporting PAYE in real time from October 2013’ – see HMRC What’s New item at: http://www.hmrc.gov.uk/news/rti-expands.htm. However, it has only become clear recently that HMRC would be mandating virtually all employers with 5,000 or fewer employees to move over in April 2013. Many employers understood that they could choose a date between April and October 2013, eg once they have acquired and installed RTI compliant software: this will not be the case.

The plans for migration are now:

  1. Pilot employers - in April 2012, a small group of employers and pension providers joined the RTI pilot to test the new payroll processes. More employers have joined since then and more will join as 2012/13 progresses.
  2. Large employers (generally with over 5,000 employees) – are being moved over gradually between now and October 2013 to ensure a smooth transition. HMRC are contacting these employers direct to agree a migration date.
  3. New employers – will be asked to go straight into RTI once they register for PAYE, though they can ask to defer until April 2013, eg if their software will not be RTI compliant before then.
  4. Other employers, including most SMEs – to move in bulk from 6 April 2013 after HMRC’s Enterprise software upgrade.

HMRC have used the new dates in letters to employers issued during October and April 2013 is the default date used in the online guidance at http://www.hmrc.gov.uk/rti/index.htm.

Most employers will need to ensure they have RTI compliant software in place by April 2013 or make arrangements to use an external provider such as a payroll bureau or tax adviser.

A gradual managed move into RTI for those not on the pilot over the 6 months from April to October 2013 had been proposed by HMRC, but a number of small employers said moving mid-year would be confusing and asked if they could move at the start of the tax year.

Moving over in April 2013 is likely to give a longer period to adjust to the new system before late filing penalties kick in as we have asked HMRC to provide an initial penalty free period before the new penalty legislation is introduced.

The pilot

If you use payroll software to run your payroll and would like to volunteer to join the pilot:

  • Commercial software users - you can contact your software provider for further information. Applications are dealt with through your software provider. You would need to have applied by 31 December 2012 to join from March 2013.
  • HMRC's Basic PAYE Tools users - you can apply by sending an email to rti.migration@hmrc.gsi.gov.uk by 30 November if you would like to join from January 2013. Please use the subject heading 'BPT for pilot'.

HMRC will also write to some employers and pension providers to invite them to join the pilot. Unless you are invited to join the pilot or are given a dated slot for a large company you will remain on the existing PAYE system with no changes to your payroll processes until April 2013.

If you act as an agent, you will need your client’s permission to join the pilot.

If your affairs, or your client’s affairs, are not particularly straight forward, you may want to consider joining the pilot to highlight to HMRC some of the issues that need to be resolved before penalties start.

read more @ tax.org.uk

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