Revenue relaxes RTI rules for small firms

Tax advisers are welcoming an announcement by HM Revenue & Customs that its PAYE Real Time Information rules will be relaxed for the smallest businesses for a limited period.

From April 6th 2013, limited companies and other employers had been required to report details of payments made to employees, including directors, to HMRC “on or before” the time of the payment

But following concern that the smallest firms would find the requirements onerous, HMRC now says that, until October 5th 2013, employers with fewer than 50 employees may send the information by the date of their regular payroll run.

That means that such smaller employers who find it difficult to report every payment to employees at the time of payment are, for the next few months, permitted to submit the data to HMRC “no later” than the end of tax month (the 5th).

The Low Incomes Tax Reform Group reflected: “Permitting [smaller] employers to report slightly later, when they complete a normal monthly payroll process, rather than requiring them to do so on or before the payment, is welcome.”     

The Chartered Institute of Taxation agreed that the extra, time-restricted leeway for the smallest employers was good news: “By October 2013 we should have a clearer idea of what concessions small business will require for RTI to work effectively for the good of all.

“And then we can have a sensible dialogue with ministers and officials about how to build what we have learned into the design of RTI and universal credit in future.”

HMRC says it will work with employer representatives over the summer to gauge the impact of RTI on the smallest businesses and consider what improvements can be made to the system in due course.

Editor’s Note: Further ReadingContractors’ Questions: Will RTI affect umbrella company contractors?

 

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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