The tax authorities confirmed the plans in Her Majesty's Revenue and Customs (HMRC) September, "Employer Bulletin", issued this week. And according to the employment tax team at KPMG in the UK, receiving this letter is likely to be the first that some employers know of the most radical shake-up to the PAYE system in over 60 years.
Employment tax director at accounting firm, KPMG UK, Steve Wade, said: "Moving to real-time information (RTI) reporting, in which employers send payroll information to HMRC on or before every payday instead of after the end of the tax year is an enormous change."
He added: "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 the transition is smooth. But if not, they are likely to face significant problems complying and may incur penalties," Wade stated.
KPMG has said employers reporting PAYE information to HMRC in real time will play an important role in supporting the introduction of universal credit by the Department for Work and Pensions (DWP), due to be rolled out across the UK from October 2013.
