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SMEs unprepared for changes to PAYE

By Holly Jones | July 28, 2011

Employers will be required to provide updates about employees to HMRC every payday, not annually
Employers will be required to provide updates about employees to HMRC every payday, not annually
New research has revealed that the majority of SMEs in the UK are not ready for upcoming changes to Pay As You Earn (PAYE) Real Time Information.

The research, by Sage UK, examined 1,100 small businesses and found that 76 percent admitted that they were completely unaware that any changes were due to be made to PAYE.

The PAYE system has been in place since 1944 and has seen few changes in that time. It is the method used by employees to pay income tax and national insurance contributions. Employers deduct payments from employees’ pay each week or month.

The change to PAYE will require employers to provide updates to HMRC regarding PAYE, national insurance and student loans each payday, instead of annually.

Employers are being advised to ensure that they fully understand the changes before the new rules are implemented to minimise any negative impact unpreparedness may have on their business.

Neilson Watts, product manager at Sage’s small business division, said: “Small businesses are faced with a variety of different payroll providers who all offer different levels and standards of support. The new changes are not mandated for providers to include within their software, so it is vital that business owners ensure that the appropriate procedures are put in place.

“My advice to any small business that has any lingering doubts around the changes would be not to be afraid to ask your payroll provider for advice, support and guidance to ensure that you and your company are prepared for the changes.”

The changes to PAYE will be tested in April 2012 and will begin with larger businesses in April 2013. From October 2013, the changes will apply to all UK businesses.

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