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PAYE changes coming in April – top tips for getting ready

This April (2013) sees some major changes to the PAYE system.  For salary or wage payments made to employees on or after 6th April, employers will need to send PAYE returns electronically, using RTI-enabled software, to HMRC every time they pay their employees as part of routine payroll processes.

The returns are known as a “Full Payment Submission” (FPS) and will include details of all employees’ pay, tax and deductions.  It will no longer be necessary to submit a separate return at the end of the year.

If you manage your own payroll, there are some key things you must do before April:

  1. Visit HMRC website at hmrc.gov.uk/rti for comprehensive information about Real Time Information (RTI), including how to prepare, payroll software options and hints and tips to help avoid some common pitfalls.
  2. Acquire new or updated payroll software – talk to your payroll software provider or if you outsource your payroll, talk to your payroll service provider.
  3. Start checking and updating employee information. It’s vital that the information you have about your employees is accurate and up to date.

This post explains what employee information you must check.

Checking employee information

As mentioned in point 3 above, it’s essential to make sure that your employee information is accurate.  You should check the following points.

Names:

  • Always provide the individual’s full and official forename(s) and not just their initial(s).
  • Make sure that their forename(s) and surname are in the correct order.
  • Check that you have spelt the names correctly. For example, enter ‘John Smith’ and not ‘J Smith’ or ‘Smith J’. Include a middle name if the person has one, for example ‘John Michael Smith’. Simply putting an initial such as ‘J Smith’ makes it difficult to trace the correct account.
  • Check an official document to ensure that you have spelt the name right – ‘Smith’ and not ‘Smyth’.

Date of birth:

  • Always provide the correct date of birth. Do not enter a default date or incorrect date.
  • Check that the date of birth is in the correct format. Enter the day, month and full year of birth.

National Insurance Number

Please always enter the correct National Insurance number. The number must begin with two letters, followed by six digits and end with a letter which will be either A, B, C or D.

Here are a few examples of the types of things that can go wrong and leave you uncertain about an employee’s number:

  • an employee only works for you for a very short time
  • an employee gives two slightly different numbers
  • an employee doesn’t have documentation demonstrating their correct number

HMRC’s real time information system does not currently recognise National Insurance numbers prefixed ‘MA’.  Although these numbers are valid in the UK, a message will be sent to the submitter to say that they are incorrect.  Employers should ignore such messages and continue to use the National Insurance number supplied by their employee.

Verification

To ensure the details you have are accurate, you should verify the information you need from an official source such as:

  • HMRC and/or Department for Work and Pensions (DWP) documentation
  • passport documentation
  • birth certificate
  • full driving licence (photo version)

Although this level of checking is usually reserved for new employees, the new way of reporting in real time means that you need to ensure that the details you have for existing employees to make sure that everything is correct and up to date.

Questions

If you’re not sure about how the PAYE changes will affect you, give us a call on 01487 815720.

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