Accountancy firm urges SMEs to be aware of the looming changes to the payroll law.

Accountancy firm Mitchell Charlesworth is urging SMEs to be aware of looming changes to payroll law. HMRC is trialling a new system called Real Time Information (RTI) to improve the operation of Pay As You Earn (PAYE).

The current system allows employers to issue PAYE information at Payroll Year End. The new RTI system will require firms to send this PAYE data, including National Insurance Contributions and students loans, to HMRC every time they pay an employee. The measures are due to be phased in from April 2013 and will become mandatory for all employers by October 2013.

Mitchell Charlesworth’s Director of Payroll Ken Davies said the new measures will increase the workload for employers who will be required to submit data on a more regular basis:

"Essentially RTI will require employers to submit PAYE information electronically to HMRC on or before each paydate. However, for many SMEs time is precious and this new system will ultimately add to the workload. Therefore it is crucial to get a grip of the new requirements now to ensure payroll systems work effectively into the future. It is vital to the smooth running of any business that staff are paid efficiently and on time.

Davies said it marked a significant change in the payroll system which has remained almost unchanged for more than 60 years: "Many businesses will be accustomed to the way their payroll operates, we are urging firms to not let news of this new legislation slip through the net."