a. Update or acquire software or use a payroll provider:
When: You should do this as soon as possible or whenever your existing software provider tells you, but by 6 April 2013.
To be ready to report your payroll information each payday you must do one of the following:
- get payroll software if you don’t already have any (some packages are free)
- update your existing payroll software to a version with this functionality (your provider can advise on this)
- use a payroll provider (such as an accountant or payroll bureau) to do the reporting for you.
b. Ensure employee data is complete and correct:
When: You should start doing this now.
Before you change to PAYE in real time it’s essential that the data you hold in your payroll records is complete and accurate. You must check and, if necessary, update the data for all your employees or pensioners – certain details are essential, and must be in full and be correct or the payroll reports you send to HMRC will be rejected.
c. Change your procedures and inform your staff
When: You should start developing new procedures now. You may need to collect and record more information from your employees than you do today in order to report your payroll information to HMRC.
You may wish to let your staff know that you may need to check some information on your payroll records.
d. Register for PAYE Online
When: You should do this now.
If you are not already registered, and you are responsible for your own payroll reporting, then even though there are changes in how you report your payroll information to HMRC, you will still need to register for PAYE Online because:
- PAYE Online is how you may still send certain forms to HMRC
- if an employee tax code changes, PAYE Online is one of the ways HMRC will tell you
- to send your payroll reports to HMRC, your software will need your PAYE login details.
e. Include new information in your payroll records
When: Start doing this as soon as your software supports the additional information required.
When you report your payroll information in real time, you will need to send certain information that you may not currently keep on your payroll system. So you will need to inform your staff and change your processes to collect this new information – although you may not be able to include it in your payroll records until your payroll software is compatible.
f. Align HMRC’s data with yours
When: At or before the time you send your first report to HMRC.
To make your first PAYE real time payroll report successful, the data that HMRC holds on your employees must match your payroll data. When you change your payroll to PAYE in real time you will need to send HMRC information about every employee who has worked for you in the current tax year, even if they have already left your employment. So even if you don’t have to start reporting payroll information in real time until the 2013-14 tax year, it’s best to have new software and procedures in place before 6 April 2013, so that all the necessary information is already stored in your payroll system ready to be reported.
g. Start reporting your payroll information
When: HMRC is inviting a number of employers to participate in a pilot during 2012-13. And most employers will begin to operate their payroll in real time in April 2013, with all employers doing so by October 2013.
Once you’ve followed all the previous steps, you will be in a position to start reporting your payroll information on time.
h. Keep an eye on the HMRC PAYE news and updates page
When: Now and at regular intervals.
Any important news relating to PAYE and payroll operation is published on HMRC’s PAYE news and updates page. There are typically at least a couple of items published every month, so checking on it as part of your monthly routine is a good idea.