PAYE modernisation moves closer with Real Time Information

Modernising the PAYE system through real time information moved a step closer as HMRC published a consultation document: " Improving the operation of Pay As You Earn: Collecting Real Time Information".
 
PAYE Real Time Information means employers will send HMRC information about tax and other deductions from employees' pay when the employee is paid, rather than at the end of the year as at present.
 
HMRC expects that real time information will mean that annual employer returns can be phased out as HMRC will use the real time information to update records when a taxpayer changes employer, thus removing the need for employers to separately send forms P45 or P46.
 
Furthermore, HMRC will be able to help prevent and detect errors and fraud within the welfare and PAYE systems, won't need to wait until year end to identify and collect underpayments by employers, and will be able to adjust employees' tax codes in year to reflect their changing income.

Let's hope that the technology works...


This was first published in January 2011

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