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November 09, 2012

HMRC steps up RTI pilot but many firms are still not ready for PAYE changes

Up to 250,000 employers are set to join the Real Time Information in PAYE (RTI) pilot between now and 31 March 2013, according to HM Revenue & Customs (HMRC).

In April 2013, employers will start to send PAYE data electronically to HMRC each time they pay their employees as part of routine payroll processes, rather than sending a separate return at the end of the year. Returns will include details of all employees' pay, tax and deductions.

Ruth Owen, HMRC's director general personal tax, said: "The pilot continues to go very well and remains on track. We started with just 10 employers in April and now have over 1,800 PAYE schemes successfully submitting PAYE returns in real time, with more than 1.97 million individual records."

Owen added: "The main thing now is that those employers not in the pilot do not delay but start to prepare for April 2013 now ­– for example, by checking their software will be updated and employee data is accurate and up to date."

However, a quarter of UK SMEs have never even heard of RTI, and a third are uncertain how it will impact their business, according to the latest research from business software and services provider Sage UK.

The findings come from the October 2012 Sage Omnibus of over 1,000 UK SMEs. It also reveals that 50% of business owners don't know when the RTI changes will come into effect for their business.

Sage has released a new version of its payroll software for small and growing businesses, Sage 50 Payroll RTI Edition, developed using feedback from over 4,000 Sage customers that participated in the HMRC pilot. To find out more about RTI, small firms can get advice at Sage's online RTI resource centre.

"RTI represents the biggest change to PAYE reporting for over half a century and it will affect the way every business does things," said Lee Perkins, managing director, small business division, Sage UK. "HMRC is currently working hard to put it on the radar of everyone, but if you've not heard from your payroll software provider on RTI by now you need to be asking some serious questions about their readiness for it."

** After this news article was published, HMRC announced a "relaxation of reporting arrangements for small businesses". According to HMRC: "Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th)."