News Updates

NEW YEAR UPDATE
Posted on: 05 Jan, 2012 05:23:41 pm

At the moment employers send HMRC details of payments and statutory deductions for all their employees at the end of the tax year. HMRC states that most of the coding errors that occur are due to those employees who have more than one source of income and because this is not always identified until after the end of the tax year, the individual is not paying the right amount of income tax. So when the employee information is eventually sent in, it can be months if not years before the appropriate corrections are made to individuals tax codes.

A regular feature in and out of the news over the last couple of years has been about HMRC tax code errors, refunds to some and big tax bills to others. This is all to do with the new system that was introduced in 2009, the National Insurance and PAYE system (NPS). It is actually a very positive move that as all these tax code errors have been identified by the new system as it means that the information HMRC hold is continually becoming cleaner and more accurate.

So RTI has been introduced to ensure that people are paying the right tax and at the right time. RTI will mean that the information normally sent at year end will actually be sent to HMRC before or at the same time as a payment is made to an employee. So whether the pay frequency is weekly, fortnightly or monthly – all information must be sent to HMRC every time someone is paid. This move will see the end of the current Annual Employer Return process.

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