From 6 April 2013, all employers operating PAYE schemes are required to make RTI returns to HMRC each time they make payments to their employees, although HMRC have announced this week that small businesses have been given a temporary exemption from RTI payroll requirements.
Until 5 October 2013, employers with fewer than 50 employees can send information to HMRC no later than the end of the tax month, rather than on the payment date. This will help employers paying weekly to adapt to the reporting arrangements. It is important to note that, where payroll software is being used, it will create a file each time the payroll is run, so this relaxation is aimed at those who do not utilise software, or perhaps are used to sending information in batches to an agent.
HMRC have said it will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses.
There will be a new model for late filing and late payment penalties introduced to ensure it works effectively for RTI. Measures have been proposed in this Budget, with legislation to be introduced in Finance Bill 2013. The new penalties will apply from 6 April 2014 to each PAYE scheme, with the size of the penalty being based on the number of employees. Different sized penalties will apply to micro, small, medium and large schemes, although we have no information as to the size of those penalties yet.
There are various other changes to be brought in so that only one penalty will apply per month even where there is more than one return being made in the month, together with relief where there is only a small difference between the payment being made and the amount due. In addition, penalties will be issued quarterly, are ring-fenced so subsequent changes don’t require re-calculation, and penalties can be amended rather than reissued. These measures will reduce the number of separate penalty notices being issued.