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Pay As You Earn real time information consultation launched

News Release issued by the COI News Distribution Service on 02 December 2010

Modernising the PAYE system through real time information moved a step closer today when HM Revenue & Customs (HMRC) published a consultation document “Improving the operation of Pay As You Earn: Collecting Real Time Information”.

PAYE real time information means employers will send HMRC information about tax and other deductions from employees’ pay when the employee is paid, rather than at the end of the year as at present.

The Exchequer Secretary to the Treasury, David Gauke MP, said:

“We are determined to improve the way the PAYE system works and real time information has the potential to reduce burdens on employers.

“Introducing real time information is an important step in modernising PAYE and we want to hear the views of employers, software suppliers and the payroll industry as we develop the new system.

“Real time PAYE information will also support the Universal Credit by enabling DWP to update information about claimants’ financial circumstances much more quickly without the need for claimants to provide information about their income.”

HMRC’s Stephen Banyard, Acting Director General Personal Tax, said:

“We are working closely with customers to develop the real time information system. We will pilot the system from April 2012 and begin to move employers onto the new system in stages over the following 18 months. We expect all employers to be using the new system by October 2013.”

We envisage that real time information will mean that

annual employer returns can be phased out, reducing costs for HMRC and employers HMRC will use the real time information to update records when a taxpayer changes employer - removing the need for employers to separately send forms P45 or P46HMRC will have the real time information needed to support the Government’s welfare reform agendaHMRC will be able to help prevent and detect errors and fraud within the welfare and PAYE systems HMRC will not need to wait until year end to identify underpayments by employers and collect those debts, andin some circumstances, HMRC will be able to adjust employees’ tax codes in year to reflect their changing income and therefore, over time, reduce the need to send employees repayments or bills after the end of the year.

This is the second stage of consultation. There were almost 400 responses to the discussion document “Improving the Operation of Pay As You Earn” in July 2010. The majority of respondents were in favour of moving to a real time information system for PAYE. The consultation document issued today summarises responses to the July discussion document and looks in detail at options for implementing a new real time information system.

Notes to Editors

1. Pay as You Earn (PAYE) is the system that collects the tax and National Insurance contributions due from millions of people in employment. It also collects tax on many private pensions, is used to collect student loan repayments and helps employers calculate statutory payments for parental responsibilities or sickness. 2. “Improving the operation of Pay As You Earn (PAYE): Collecting Real Time Information” can be found at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_030851 3. The Government welcomes responses to the issues and questions raised in this discussion paper by 28 February 2011. 4. Please send responses to this consultation document to: HM Revenue & Customs, PAYE Consultation, Room 1/40, 100 Parliament Street, London, SW1A 2BQ Or email to paye.consultation@hmrc.gsi.gov.uk 5. Improving the Operation of Pay As You Earn (PAYE) – published in July 2010 – can be found at: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_030623.NAT 58/10Issued by HM Revenue & Customs Press Office Press enquiries only please contact:

Contacts:

Helen Jones
Phone: 020 7147 2328
helen.a.jones@hmrc.gsi.gov.uk

HMRC Out of Hours
Phone: 07860 359544
NDS.HMRC@coi.gsi.gov.uk