As part of the Autumn Statement announcements on Wednesday 22nd November 2023, HM Revenue and Customs (HMRC) has confirmed a new measure which will require businesses to change the information they provide for both income tax self-assessment and real-time returns completed by employers. So these changes will impact the Real Time Information (RTI) Full Payment Submission (FPS) submitted by payroll!
The HMRC intention is to implement three new requirements via regulations and a further technical consultation.
- Employers will be required to provide more detailed information on employee hours paid via Real Time Information PAYE reporting.
- Shareholders in owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies via their Self Assessment return.
- The self-employed will be required to provide information on start and end dates of self-employment via their Self Assessment return.
The objective stated by HMRC is:
'to improve the quality of the data collected... to provide better outcomes for taxpayers and businesses, as well as improving compliance, resulting in a more resilient tax system'.
Paid worked hours!
According to HMRC, the additional data is already held! However, for many businesses and employers that assumption may come as a bit of a shock! And more shock for those who process the payroll for employers as a service.
Amongst other item legislation, a change will be introduced to amend Chapter 6 of Part 11 of ITEPA 2003, to insert a new section 707A before section 708, to enable HMRC to specify in secondary legislation additional data that will be required from employers.
The hours paid estimate has been based on assumptions that employers are already required to keep data to satisfy National Living Wage and National Minimum wage rules, and how easy it would be to include that data in the regular Real Time Information (RTI) submission process!
They do at least acknowledge that PAYE-registered businesses affected by this measure will see an increase in the cost of submitting their RTI data.
Will payroll know the worked hours paid?
The answer will be: Yes, Maybe and no!
Although some employers may pay employees via using hours worked, many won't.
Payroll may receive an hour values for many things, whether that is worked hours, absence, holidays, or even a measure for a minor unit based allowance, the requirement for hours paid may prove to be a challenge and require some business process and data interchange restructures. For many the payroll is requested to pay a cash amount such as salary with no reference to the hours or view of whether the individual is measured or unmeasured for minimum pay purposes.
There is a requirement to declare a value on the payslip for variable hours paid, however, not all work time is required to be displayed.
And what about unpaid work time? even when time is measured, some dubious rounding activity can take place with some reporting on social media that even short period of late arrival result in 15 or even 30 minute of work and paid time loss.
So when is this happening?
The HMRC have stated that this new requirement will not be implemented until at least April 2025. That may seem a long time into the future, however, employers will need to review how they will record and pass through paid working time through to payroll for the application of the data onto the FPS submission for each individual employee. Time will fly by quickly. Readiness may take some investment, planning and time.
For some this will be a minor activity as they do have the data. For others, this may be a shock and they will need to review how they track the appropriate time and report through to their payroll software and services for accurate reporting.
PAYadvice.UK 23/11/2023
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