A FREE resource from the UK accountancy profession

PAYE Real Time Information, Universal Credit & your business Read More

Report Issues


Last minute change to RTI ‘on or before’ rule for small employers

March 19, 2013


HMRC announced today a temporary change to the ‘on or before’ RTI reporting rule for small employers.

Until 5 October 2013, employers with fewer than 50 employees who pay employees weekly, or more frequently, may report RTI monthly if they find it difficult to report RTI to HMRC when they pay employees. This temporary relaxation of the RTI ‘on or before’ rule for employers falling into this category means they may send information to HMRC by the date of their regular monthly payroll run but no later than the end of the tax month, the 5th day of the following month.

The pre-Budget announcement by HMRC comes just days before RTI reporting becomes mandatory for employers on 6th April. HMRC acknowledged that the last minute change was made in reply to representations made by the accountancy profession and leading small business groups.

The Federation of Small Businesses and others have expressed their concerns that the burden and cost of complying with the ‘on or before’ rule for pay cycles that operate more frequently than monthly would be too great.

John Walker, national chairman of the Federation of Small Businesses, said: “It is great news that HMRC have listened to our call for the smallest firms to report regularly in line with their main payroll run, but not in real time.

“We hope that HMRC make this regular reporting a permanent measure to help the smallest firms they review the system in the summer. We look forward to seeing those findings.”

Payroll World, the leading provider of payroll news, broke the story which was later confirmed by HMRC. Payroll World reported the temporary ‘easement’ of the RTI reporting rules was given because some small employers who pay employees weekly, or more frequently, but only process their payroll monthly need longer to adapt to reporting PAYE information in real time than anticipated.

Steve Wade, employment tax director at KPMG, an expert on HMRC’s plans for RTI commented to Payroll World: “The pain is relieved – at least for the moment – HMRC has thrown a lifeline to small businesses by temporarily relaxing the rules about exactly how ‘real time’ the real time reporting of PAYE data to the tax authorities has to be.

“This easing of the requirements should make compliance significantly easier and cheaper for many small employers up and down the country – a sensible and welcome move at a time when so many businesses are already struggling and we need to get the UK economy up and running.”

"After intense behind the scenes lobbying by the ICAEW Tax Faculty and other representative bodies, [HMRC] has announced that employers with fewer than 50 employees that find it difficult to report every payment to employees at the time of payment, can send information to HMRC by the date of their regular payroll run but no later than the end of the tax month, which is the 5th.

Paul Aplin, the chairman of  ICAEW’s Tax Faculty’s Technical Committee and a partner in A C Mole & Sons, who invited Lin Homer, the HMRC chief, to his firm to see for herself the challenges the ‘on or before’ rule created, commented “This is a victory for common sense.

“The easement gets round the proposed 'on or before' rule which would have forced employers who run monthly payrolls but who pay more frequently having to report each payment as it is made or within seven days: they can still report monthly.

“Today's announcement provides a practical solution for many small employers who would otherwise have had to increase their reporting frequency from monthly to weekly or even more often. Over the next six months we will continue to work with government and HMRC to find permanent solutions to the challenges RTI will pose for employers."

However, the temporary rule change was widely reported as a ‘postponement’ and ‘delay’ to RTI, undermining the efforts of HMRC simply to communicate awareness of RTI to employers, which business surveys continue to show remains low, and the need to get ready. The Financial Times article on the announcement was entitled “UK tax office postpones payroll reform”.

< Back to news