UK employers are set to receive a letter from the tax authorities in October, outlining the key changes that will come in with real-time information (RTI) reporting.
Between April 2013 and October 2013, all employers will start reporting payroll information to HM Revenue and Customs (HMRC) in real time (on or before every payday), instead of after the end of the tax year, as per the current situation.
Steve Wade, employment tax director at KPMG in the UK, said: “The larger employers are putting plans in place, or at least thinking about it. But many small and medium-sized businesses are likely to be blissfully unaware of this radical change.
“If they have up-to-date payroll software, hold current and accurate employee data and their software provider is gearing up for the move to real-time reporting, then they may find that the transition is smooth. But if not, they are likely to face significant problems complying and may incur penalties.
“Employers across the country, from the smallest to the largest, need to get their heads around what the move to real-time information reporting means for them and how they are going to comply with the new rules.
“The letters from HMRC next month are just the beginning of the process. They need to have a good look at their current payroll systems and think about the steps they need to take between now and next April.”