Thu, 15 Mar 2012
HMRC says RTI will cost employers more than it first predicted
HMRC has revised its figures for the financial burden Real Time Information (RTI) will have on employers.
The Revenue has also conceded there will be a one-off transitional compliance cost for firms as they begin to submit RTI.
In a document published today the Revenue says it expects employers to make savings from a reduction in administrative burdens resulting from abolition of some current reporting requirements.
However it concedes this saving, estimated as approximately £330 million per year from 2014-15, will be offset by new requirements for employers to collect and submit information to HMRC each time employees are paid.
HMRC’s initial assessment of the new ongoing administrative burden is approximately £30m per year.
The document states: “It is acknowledged that some employers who operate PAYE will face an additional cost because under RTI they will need to report payments made to all of their employees, including those paid below the National Insurance contributions Lower Earnings Limit. HMRC does not hold the data needed to estimate this cost.
“The resulting net ongoing impact on administrative burdens is estimated as a £300m saving per year. HMRC accepts that this figure may change as business impacts are better understood through the pilot, but expects the final impact to be a significant net saving.”
Launch costs
In its revised estimates there is a one-off transitional compliance cost for employers at the point when they begin to submit RTI.
The cost includes an estimated £35m to check and amend data held about existing employees, roughly £20 per PAYE scheme.
There is also a £85m cost for training and familiarising staff with the new processes, on average around £50 per PAYE scheme.
The document also highlights additional costs for any updates to payroll software and processes that the Revenue says have not yet been estimated.
“Software developers will need to implement changes in their products, and these costs may be passed on to employers via increased software charges,” it warns.
From next month HMRC will begin a phased introduction of RTI. Under RTI, information about tax and other deductions under the PAYE system will be transmitted to the Revenue every time an employee is paid.
Employers using RTI will no longer be required to provide information to HMRC using Forms P35 and P14 after the end of the tax year, or to send Forms P45 or P46 to HMRC when employees start or leave a job.
See also:
- HMRC publishes RTI guidance
- Mrs Dummy? HMRC puts onus on employers to clean up data ahead of RTI
- U-turn on pasty tax could mean VAT hike later in the year