We are just weeks away from the biggest change to payroll legislation in 60 years. On the 6th of April, reporting PAYE information in real time will become mandatory for employers. And yet our research has shown that less than a third of small businesses have taken any action towards implementing changes.
The question is, why not?
The inertia appears to be caused by confusion and complacency; with some not taking any steps because they don’t know what they need to do and some because they feel they have plenty of time to make arrangements. Thanks to announcements from HMRC, most small business owners know the change is coming, but are burying their heads in the sand. Not surprisingly, it is the smallest businesses that are the least prepared. A third (31%) of micro businesses – firms with fewer than 10 employees – say they have little or no confidence that they are ready for the changes compared to only 15% of larger SMEs (10-49 employees).
While any changes to compliance legislation can be daunting, preparing needn’t be a huge overhaul or time-consuming experience.
So, how do small business owners go about switching to Real Time PAYE?
For employers that already use payroll software or a service provider, they need to confirm that the product or service currently in use has been, or can be, updated to report PAYE in real time. Improving data quality is essential for a successful transition to Real Time PAYE. So it’s really important that the data employers hold in their payroll records is complete and accurate.
Details such as name, date of birth and National Insurance Number, must be in full and correct. This is a really simple step that can be taken early to ensure small businesses are prepared and ready for real time reporting. The HMRC website has an entire section devoted to explaining how to go about switching to Real Time PAYE. It breaks down the process into manageable tasks and explains exactly what must be done in order to make the transition.
Don’t forget your accountant
It’s worth talking through the implications of Real Time PAYE with your accountant – they may be able to make recommendations to fit your circumstances and help you to be ready.
Lisa Turner is a payroll specialist at Intuit, a provider of accounting, payroll and payments solutions for small businesses.