HMRC have published a discussion document on improving the operation of PAYE by moving to a system that collects information on PAYE deductions at the time that employers pay their employees. The document is intended to start a discussion on the collection of real-time information and comments on the suggestions set out in the document are sought by 23 September 2010. In particular, HMRC are interested in how such a system could be constructed in order to simplify the process for employers.
Under real time information, employers paying PAYE electronically would send HMRC details of an employee's pay and deductions for tax, NIC and student loan deductions together with the payee's identify at the time that the payment is made to the employee. The information would be supplied for all employees, including those from whom the employer makes no deductions from pay.
The required information is information that would be produced automatically by computerised payroll systems. The idea is that it would be sent to HMRC as part of the process for making payments automatically.
Moving the a real-time system would simplify the system when an employee joins or leaves. It would also provide the potential to simplify year-end reporting, reducing the associated burden placed on employers.
The discussion document is available to download from the HMRC website.