Real time PAYE (RTI) was introduced in April 2013 for all employers. All payroll changes and amounts due are now reported as they occur rather than at the end of the tax year.

This was a major change to the way employers wages were processed and some had problems with the introduction if they were not using a payroll software provider.

To ensure compliance HMRC had originally intended to introduce late filing and late payment penalties from April 2014. However the implementation has not been without problems as there have been errors and technical issues with HMRC’s systems. This has led to late filing notices being issued incorrectly and payments not showing on the HMRC website.

As a result HMRC have announced that the introduction of penalties will be delayed. In year interest on overdue payments will commence from 6 April 2014, late filing penalties start from October 2014 and late payment penalties from April 2015.

Whilst it is a relief that HMRC are listening to concerns over RTI and delaying the introduction of automatic penalties it can only be hoped that they can resolve the system problems before they start sending out penalty letters.

From 6 April 2014 the government have introduced an annual Employment Allowance. This is aimed at reducing the barriers to small businesses growth by helping them with employment costs. It is hoped that this will encourage them to employ more staff.

This help is given by reducing Class 1 National Insurance contributions for most employers by up to £2,000 each year. This will mean that many small employers will pay no employers NI contributions at all.

This will be claimed through the payroll software and will be deducted from month / quarterly PAYE & NIC payments.

Certain employers, including those that employ people to carry out ‘personal, household or domestic work’ such as nannies, chauffeurs and care support workers are excluded from the scheme and therefore unable to claim the allowance. Public bodies such as local councils are also ineligible.

Contact your payroll provider for more information as to how this will operate.