From April 2013 there will be the biggest change to payroll procedures for over 60 years coming into force. Despite what you may have heard or read, Real Time Information (RTI) will affect Contractors. It means that Contractors working through limited companies will be required to file payroll information online each month.
RTI will have an impact!
As a contractor you should consider this new legislation just as important as filing VAT returns online for instance. Once RTI begins, failure to submit your PAYE data to HMRC on time, may see you incurring penalties. Even if the salary or Director’s fee you take is relatively small, the payroll has to be compliant with RTI. Even if your business is dormant RTI returns must be provided.
Make sure you have the right support.
RTI may be a relatively painless transition if you have the right support in place. QAccounting Contractors can relax… We’re ready!! If you outsource management of your payroll, then you may feel that this is more someone else’s problem than yours. Wrong, as in so many other areas of running a your own company, it is ultimately your responsibility as Director to be RTI compliant, so make sure you are comfortable that your Accountant is working to ensure you are compliant come April 2013.
What changes will RTI bring for PAYE?
Employers need to send information on the payments they make (or are going to make) through RTI payroll irrespective of the amount of pay.
Information must be sent to HMRC about an employee’s salary and associated deductions before or at the same time the payment is made using Full Payment Submission (FPS). If you are not outsourcing your payroll then the way for small employers to do this is using HMRC’s free software for small employers.
There is no longer the requirement to submit P14s for employees or to submit a P35 summary and employers declaration. P45 and P46 (new starter forms) will be retained by employers but employers are not required to submit them to HMRC.
What are the areas that won’t change for PAYE under RTI?
Employers will still have to issue P60s to employees.
Not included under RTI are Benefits In Kind so as an employer you will still be required to submit P11D, P11D(b) and P9D forms where applicable after the end of each tax year.
The way in which HMRC calculate income tax and National Insurance Contributions remains the same as well as how payments are made to HMRC.
So to summarise:
This is important, yes Contractors are caught up in RTI. Undoubtably this adds extra bureaucracy to payroll procedures, the likes of which we’ve not seen for many years. But the good news is, if you’re a QAccounting client, relax, we’ve got it covered. Don’t hesitate to get in contact with us if you have any questions.
QAccounting. You Count. We Count.
The article outlines the typical tax payment dates and methods of estimating the values of tax payable for each type of tax, including VAT, PAYE, NIC, CIS, Corporation Tax, and Dividend and Personal Taxes.
Rishi Sunak has proposed a number of changes to the way that Corporation Tax will be calculated and applied. Learn more.