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Planned improvements to the PAYE system

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Her Majesty’s Revenue and Customs (HMRC) has published a consultation paper on improvements to be made to the PAYE system.

PAYE is the system whereby HMRC collects tax and National Insurance contributions from employers on behalf of employees.

The proposed changes will enable employers to submit PAYE information on a real time basis when employees are paid, rather than at the end of the accounting year. HMRC states that this will reduce the burden on employers by removing the requirement for them to submit annual returns and to send out P45 and P46 forms to former employees. The proposed new system will also assist HMRC in detecting fraud and errors in the welfare and PAYE systems and in identifying and collecting underpayments more quickly. It will also allow HMRC to adjust employees’ tax codes during the year as their employment and income changes, avoiding the need to make adjustments and request additional payments or make reimbursements to employees at the end of the year.

Responses to the consultation are due by February 2011.


Written by Andrew Hodges

December 13, 2010 at 11:21 am

Posted in Comment, LinkedIn

Tagged with ,

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