Real-time PAYE eased again for micro businesses

MICRO EMPLOYERS will be given another two years’ grace from compliance with real-time PAYE reporting requirements.

The deadline for compliance with real-time PAYE reporting (RTI) will be April 2016 for businesses with fewer than ten employees. Those with up to 49 employees will have up to April 2014 – itself an existing easement – to send PAYE information about their employees in real time.

The latest easement, however, will also not extend to those that start up during the period.

HMRC’s director general for personal tax, Ruth Owen, said it had been “appreciated” that this had presented the smallest businesses “some challenges”. “This package strikes a good balance by ensuring RTI improves PAYE processes while minimising the impact on micro businesses and their agents by giving them up to two years to adapt.”

Paul Aplin, AC Mole & Sons partner and ICAEW tax faculty technical committee chairman, gave a qualified welcome to the announcement. While “good news”, he would have preferred the existing easement to be extended for those with 49 or fewer employees.

“The best outcome would have been for the existing easement to be extended but ministers were clear that they would not do this. Extending it by a further two years for micro employers will help many small businesses to keep their costs of operating RTI under control. That has to be good news.”

Details of an external survey commissioned by HMRC on takeup of RTI were also released today, and showed that the vast majority of tax advisers and businesses had seen no benefit, or felt they had had suffered extra burden, following RTI’s introduction.

More than a third (36.4% ) of 17,000 employers said the burden of paying NI and income tax had increased since RTI’s introduction. Half (52.8%) said it had stayed the same. Seven in ten (69.1%) of 4,300 advisers said the burden had increase dealing with RTI, with 25.8% saying it had stayed the same.

“What is really striking in the survey results is the fact that hardly any employers or agents who responded thought that RTI had reduced or would the costs of operating their payrolls. That result comes as no surprise,” Aplin added.