Changes are taking place within the world of payroll, employment and taxation all the time, which is why at Cascade we ensure our fully-integrated HR and payroll software evolves in line with any industry updates, legislative or otherwise.
However the profession is currently preparing for what is probably the biggest overhaul of the UK’s tax system since we first began paying our income duty, and that is the introduction of Real-Time Information (RTI).
The PAYE modernisation means that instead of submitting details of pay, tax, National Insurance Contributions (NICs) and other deductions at the end of the year, employers will notify HMRC at the point when the payroll is run. The type of information is exactly the same, it’s just the frequency and timeliness with which the HMRC will receive it that is going to change.
So why has RTI caused such a stir? It is designed to reduce the number of reconciliation payments and deductions that the HMRC will have to carry out, which means employers and employees should avoid underpaying or overpaying tax. It will also ensure a clearer understanding of employment patterns amongst individuals who change jobs frequently or have more than one employer. Furthermore the success of the new universal credit or single benefit scheme will depend greatly upon the effectiveness of RTI as there will be a greater understanding of point-in-time earnings.
The implementation of RTI could cause a headache too, certainly in the short term. For instance the HMRC has asked for a lot of information all at once, which is no easy feat to manually gather and submit. The long-term aim is also to submit each employee’s information via BACS which further complicates the scenario.
The whole idea of the piloting phase is to ensure the smoothest possible transition to RTI on a wider scale, and provide the HMRC with the opportunity to refine the process according to feedback received along the way. This of course illustrates a considered approach to this new PAYE concept, and should help to ensure the right level of support and advice is available once the switch to RTI is officially made in April 2013.
Thankfully, due to the intuitiveness of our technology, the Cascade software will be able to help you with every new RTI challenge, and will in fact do the majority of the hard work for you. Already busy working on new functionality, our development team simply views RTI as another step at the end of the payroll process, which payroll professionals will be guided through when the time comes.
The ultimate success of employers’ ongoing management of RTI will no doubt depend greatly upon the integrity and quality of the data that HR and payroll harness, store and submit. This reinforces the importance of internal procedures that are supported by a talented team of experts like Cascade, who are already dedicated to the capture, integration and effective utilisation of reliable and accurate personnel information.