The biggest change the Pay As You Earn (PAYE) system has ever seen since it began- Real Time Information – was introduced recently.

From now on employers are required to move to a new way of reporting PAYE in real time, sometimes called Real Time Information (RTI). This system sees employers report to HMRC each time they pay their employees, rather than annually, as had previously happened. The idea behind this drastic change is to update the PAYE system to a quicker, easier and more accurate tool. The introduction of RTI has been advertised by HMRC as being beneficial to employers as reporting requirements for HMRC will now be much simpler. Employers are told they will also benefit from the abolition of the extensive annual tax return that the old system required.

Speaking of the new RTI system, David Gauke, Exchequer Secretary to the Treasury, said:

“For employees, particularly the 1 million people in the UK with multiple jobs, RTI will bring benefits as HMRC starts to get details of their tax every time their wages are paid, rather than just once a year. This will make HMRC’s records more accurate and up-to-date and will reduce the number of cases where someone is found to have under or overpaid tax during the year.”

Ruth Owen, HMRC’s Director General Personal Tax, said: “This will be a year of transition. Employers will start to report PAYE in real time from their first payday on or after 6 April. We understand it may take some time before all employers will get into the routine of real time reporting. But HMRC is here to give help and support, including offering free software for employers with nine or fewer employees, regular live Twitter Q&As, YouTube videos and roadshows across the country.”