Southampton: Small businesses must sign up for RTI now, warns Grant Thornton

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TBM Team

Grant Thornton UK LLP, is urging small businesses in the Southampton area to adopt new tax rules following a misunderstanding of the system.

More than 1.4 million employers have started reporting PAYE information in real time, also referred to as Real Time Information – or RTI – since April 6 this year.

However many smaller businesses – those with fewer than 50 employers, accounting for over 80% of all UK employers – have failed to adopt the new system due to a misunderstanding around a 'relaxation' of the rules announced in March this year.

HM Revenue & Customs (HMRC) reported that 17% of employers with a payroll of 10-49 employees and 23% of 'micro employers', those with fewer than 10 employees, have still to join RTI.

Kerry McKeown, tax director at Grant Thornton, based in Southampton, said: "Although there have been a few teething problems, mainly around data quality, the new RTI system is working well. However, HMRC is concerned that some of the smaller employers may have misunderstood the relaxation that was announced in March this year.

"The relaxation stated that for those businesses a monthly report under RTI would be sufficient – so employers still need to use RTI, but only on a monthly basis, not on each occasion that they pay an employee. If the employer only pays monthly anyway, then this 'relaxation' would have no impact on them.

"HMRC will be sending out reminder letters next week encouraging employers to sign up. If your business isn't yet filing in real time you must take steps to make sure that you are set up to do so as soon as possible. In this settling down period, HMRC is devoting time and resource to helping employers to understand the changes and there is plenty of help available on its website or ask your professional advisers to help out."

Reporting PAYE in real time tells HMRC how much a business should pay it each month. This is aimed at making it easier for businesses to pay HMRC the right amount each time.

TBM Team