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Business could pay £30,000 in RTI costs

May 8, 2014


The annual payslip survey of the Chartered Institute of Payroll Professionals has found that some businesses have incurred very significant costs because of the move to real time reporting of PAYE.  Although a large proportion of respondents reported that they had not incurred additional costs as a result of RTI, some of the costs reported were as much as £32,000.  Upgrades to and purchase of new RTI-compliant payroll software and upgrades to BACS software were the main causes of the increased costs, but respondents also mentioned training staff and increased contact with HMRC as a result of errors on the Business Tax Dashboard as causes of additional cost.

The CIPP also found that there was a marked increase in the number of payroll bureaux with more than 1000 payrolls, from 0.8% in 2012-13 to 5.6% 2013-14, and speculated that the demands placed on employers by RTI may be causing them to outsource their payroll function to bureaux.  However, processing payroll in-house was still the most popular option, with 40.6% of respondents stating that this was the case for them.

The survey also found that there was a general move towards fewer, more regular pay days, with the incidence of ad-hoc payments dropping to just 1.4%, no daily payments and no rotational payments reported for 2013-14.  The vast majority of pay days were monthly, at 95.8%.  Weekly pay frequencies have remained steady between 2012-13 and 2013-14, although they have decreased from 2008 levels.  It is likely that the restrictions of RTI reporting are behind this change, as employers attempt to reduce the burden occasioned by frequent PAYE reporting.

The survey also looked at the amount of personal information held by the payroll function and how much of this information was shown on payslips.  The CIPP found that improvement of employee data required for migration into RTI reporting plus the requirements of pensions Auto Enrolment mean that more employee personal data and details of their payments is now held by the payroll department than in previous years.  However, the survey showed that this information is not necessarily finding its way on to payslips; the number of respondents including the pay period, a crucial piece of information under RTI, on payslips has fallen from 94.4% to 88.4%.  The impact of data cleansing ahead of the move to RTI might be responsible for the fact that date of birth for employees was shown on payslips by a small number of employers and bureaux in 2013-13, but has disappeared completely from this year’s results.  The CIPP commented that

“it is interesting that in a time where employers are being asked to report more and more information, they are providing employees with less”.

This reduction in information on payslips could have consequences when employees attempt to work out if they have paid the correct amount of tax. With HMRC’s annual P800 tax statement to individual taxpayers stating their personal tax adjustments due to be issued by HMRC from the end of May, it is important employees have all the necessary information to challenge claims by the Revenue that they have underpaid or overpaid PAYE. 

Although day-to-day responsibility for calculating and paying tax to HMRC rests with the employer, the individual taxpayer has final responsibility for their own tax affairs, and so the availability of clear and detailed information on what has been paid in respect of their employment is a key part of PAYE RTI’s smooth operation. As questions remain over HMRC’s calculation of employers' PAYE liabilities, the information on an individual payslip is more important than ever.

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