Real Time Information – Annual PAYE Schemes

Many one-man companies have been used to dealing with PAYE once a year, declaring a bonus in March – above the NIC lower earnings limit but below the tax threshold, so that a qualifying year goes on the NIC record. The traditional “wife’s wages” payment then happens before finalisation of the annual company accounts. Can the company have an “annual scheme” under RTI?

Although HMRC is now finally registering “annual PAYE schemes” for RTI, the definition of an annual scheme is more restrictive than employers might have hoped. In order to be registered as an annual scheme, all the employees in it must be paid only once a year and in the same tax month. Payment of earnings in more than one tax month of the same tax year, resulting in the submission of more than one Full Payment Submission (FPS) in that year, will mean automatic cancellation of the annual status of the scheme. Monthly returns will be needed from that time forward.

Setting the irregular payment flag and submitting nil Employer Payment Summaries is not that much more work.

Draft amendments have been published that would enable the current RTI relaxations for employers of fewer than 50 employees (counted at 6 October this year) to continue until the end of the current tax year and result in what would effectively be monthly reporting. Such employers would be required to make their RTI returns by the end of the tax month in which the payment of earnings was made (ie, by fifth of month). This will not only be after the event for all but a very few payments, but it will have the considerable advantage of meaning a single FPS instead of multiple returns for employers whose staff are paid on more than one occasion in the month. Will we see this temporary extension of a temporary relaxation become more permanent – or at least less temporary – in due course?

HMRC says not – but this time last year there were going to be no exceptions to reporting “on or before” the time of payment, and real time Universal Credit was still on track.

Taken from an article in the September 2013 issue of “accountancy”.

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