PAYE reporting is changing - is your pub ready?

From April, a new way of PAYE reporting will be introduced. Rather than sending the information at the year end, employers will be required to start sending PAYE returns to HMRC at the time or before the date that they pay their employees.

This process will take place electronically, as part of the routine operation of payroll. This means that, for the vast majority of pubs, the first ‘real time’ return will be the first employee payday on or after 6 April 2013.

Reporting PAYE in real time, or ‘Real Time Information’ (RTI) - will be integrated with normal payroll activity. Your payroll software will need to calculate your PAYE and send the PAYE information to HMRC as part of a routine payroll operation.

You should also look carefully at your payroll practices as - although the way PAYE is calculated is not changing - some of the practices that you use may not work for real time reporting.

This HMRC webinar for employers provides an introduction to the procedures required to operate PAYE in Real Time

What does it mean in practice?​
Instead of sending the P14 and P35 forms at the end of year you will send:

• A Full Payment Submission (FPS) each time you pay employees;
• An Employer Payment Summary (EPS) each month, which shows any adjustments to the amount you owe and
• Adjustments/corrected errors for earlier years using an Earlier Year Update

Some developers provide free products for employers with nine or fewer employees. HMRC’s Basic PAYE Tools, designed for these employers are also available. It’s also worth noting that the FPS is not available through HMRC online – you will need to use payroll software to generate your return.

Your first FPS​
In most cases your first FPS is different as it must include all your employees – whether or not you are paying them. This is because we will use it to ‘align’ our records with yours.

Employers with 250 or more employees, and some employers with complex payrolls, will need to send an Employer Alignment Submission (EAS) instead. Some payroll software includes the EAS for all employers, regardless of number of employees – this is ok. The EAS needs to be sent before the first FPS.

What you need to do​

• Update or obtain software or use a payroll service provider

Speak to your payroll software provider, if you have one, to make sure your software will enable you to meet your obligations from April 2013. There is a wide-range of commercial payroll software products available – including some free/low cost products. A list of HMRC recognised products can be found on our website.​

HMRC’s free basic software Basic PAYE Tools will also be available for the smallest employers (with nine or fewer employees).

• Check your employee data

It’s also vital that you check the employee information you hold is accurate and up-to-date. Especially that surname, forename, gender, address, date of birth and National Insurance number are correct and in the right format.

Once we have processed your first FPS (or your EAS) you will be able to make a National Insurance Number Verification Request to trace or check a National Insurance Number.

Further information​
For more help and advice about reporting in real time on HMRC’s website.​ ​

Jane Brothwood is HMRC’s head of RTI Communications​