RTI

The pending introduction of Real Time Information will transform PAYE and with only three months to go, HMRC is working hard to generate interest and ensure that employers are ready for the most radical change to employee taxation admin for 70 years. So forget the demanding new administrative burden and test your knowledge on the PAYE system. There may even be a few items on the taxman’s list you never knew about PAYE.

Back in 1944 only 15m people were registered for PAYE; today, over 30m have the pleasure of being taxed at source.

The person who piloted PAYE – Sir Kingsley Wood – died unexpectedly on the day it was due to be announced to parliament. Let’s hope the same does not befall the inventor of RTI.

Back in the 1970s employers actually had to physically attach National Insurance stamps to a card, but the whole system was modernised in 1975 when NI was incorporated into PAYE

Not to state the obvious, but the world of work has changed beyond recognition. Who would even want to stay with the same employer for life these days? As HMRC helpfully points out, ‘when PAYE came in most people remained with the same employer they started working with for most of their working lives. Today people move jobs and change employers much more frequently’.

Every year HMRC receives incorrect or incomplete information from employers. A recent study found that 128 staff were entered as Mr, Ms or Mrs Dummy, while 40 people were apparently 200 years old after incorrect dates of birth were submitted to the PAYE system.

Over 80% of errors in employee data are due to an incorrect name, date of birth or National Insurance number so next time you change jobs, make sure your employer is reporting the correct information; or your savvy accountant may be in for a surprise at year end.

Winston Churchill was Prime Minister when PAYE first came in – now we have the joys of coalition government under David Cameron and Nick Clegg.

From 1 April 2013 all employers will be required to submit tax information in real time.

Go to the related articles below for comment and insight into the implications for business.

Detailed guidance information is available from the HMRC website.