More than four in every five small businesses is unprepared for a huge overhaul of payroll taxes that is due to commence this April a study has found. Almost half 46% of companies have never heard of the new system, which is called Real Time Information (RTI), the survey of small firms found.
RTI will mean that employers must send HMRC monthly details of how much each employee has been paid and how much tax has been deducted under the PAYE system. Details have previously been sent to the taxman just once a year.
One in three companies said they were only “vaguely aware” of RTI, while 81% admitted to being unprepared for it.
Steve Crouch, financial director at Crunch Accounting, which conducted the research, said: “These new stats clearly show that despite HMRC’s claims that their communications campaign for RTI is on track, there’s still not enough information from the Government about this huge change to the payroll system.”
Companies will need to invest in new payroll software, or update their current systems to comply with RTI, with advisers warning there could be disproportionate cost implications for the smallest businesses. The change to the PAYE tax system is one of the most fundamental since 1944. Payroll information including salary, income tax and national insurance will need to be submitted monthly rather than annually. Businesses that are not “RTI compliant” by 2014 will face penalties.