Revenue to reveal tax take in ‘real-time’

Umbrella company workers are among the millions of taxpayers who will in future be able to see in near real-time how much of their pay is taken by the taxman.

Announcing the £100m initiative, HM Revenue & Customs said it would use a Real Time Information (RTI) system to allow workers to check the amount of PAYE and NICs they pay each month.

To be made available online, the information about tax and other deductions will be collected automatically each time employers run their payroll, so at the same time employees are paid.

Until now, employees typically have to wait until after the end of the tax year to receive a full breakdown of how much of their pay gets siphoned off to the Revenue.

From April next year, however, a ‘real-time tax’ trial will go live to put PAYE customers in the picture about their liabilities as they fall due, with a view to a nationwide rollout by October 2013.

Under RTI, data on joining and leaving employment will be sent to HMRC “quicker”, meaning it can check employees are paying the right amount of tax upon being paid, rather than its officers having to wait until the year-end.

As a result, it should help to get more people’s tax right first time and in-year, and cut the burden on hirers, due to employer returns being integrated into the payroll software.

“RTI will further improve the operation of PAYE”, the tax authority added. “It will enable payments to be based on near-real time information about a customer’s income, thus reducing fraud and error in the system.”