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Changes to the PAYE system

Pay As You Earn (PAYE) is the system used by employers to deduct tax and national insurance (NI) contributions from their employees every time they're paid. At the end of the tax year, the employer used to submit a summary of the payments made to HMRC during the tax year. This was a very busy time for employers and HMRC, especially when dealing with large numbers of employees.

To simplify the process, HMRC made changes to the PAYE system. From April 2013, employers have been required to send details about their payroll, including PAYE, NI contributions and student loans, online every time they pay their employees, rather than with their end of year tax return. HMRC refer to these changes as Real Time Information (RTI).

Find out more about the requirements for RTI from the HMRC website at www.hmrc.gov.uk.

Communicating with HMRC in this way:

• Improves the PAYE communication process between employers and HMRC.
• Lets you quickly check and confirm the accuracy of employee NI numbers with HMRC. Responses are sent to your IR Secure Mailbox.
• Helps HMRC to identify inaccurate information at each submission stage during the tax year, and to quickly notify the employer if changes are required.
• Ensures less work for employers at the end of the tax year.
• Results in more accurate information about employees being held by HMRC and employers.
• Supports the payment of Universal Credits, which is part of the Welfare Reform Bill under review by Parliament.

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