RTI causing errors with tax codes

It has emerged up to 40,000 taxpayers have had their income tax deductions affected by the new Real Time Information (RTI) government programme.

Under RTI, employers tell HM Revenue & Customs (HMRC) about gross pay, tax, National Insurance contributions when or before payments are made; instead of waiting until after the end of the tax year. RTI went live in April following 12 months of trials and was introduced in order to facilitate Universal Credit, which will shortly replace the Tax Credits system.

Via the information collected from the PAYE scheme, tax codes are generated for individual workers which tell employers how much tax to deduct. It was hoped that with RTI supplying HMRC with more current information that tax codes would be more accurate. But unfortunately, many of the tax codes issued have been incorrect this year, leading to some taxpayers paying the incorrect tax.

A spokesman for HMRC said: "We are aware of a problem affecting a very small number of employers and a small proportion of their employees.

"We are urgently working with the employers to solve this."

HMRC insisted that the new RTI system was working well on the whole, with more than 1.3 million PAYE schemes already reporting PAYE in real-time.

On its introduction two months ago, director general at HMRC, Ruth Owen, intimated the new scheme is arguably the biggest change to PAYE since its infancy in the 1940s.

At TaxAssist Accountants we can file all of your year-end and in-year returns for you with HMRC and provide you with P60s to distribute to your employees.

Our payroll software is on HMRC’s list of RTI-compliant software so you can rest assured that we can manage the migration into RTI and all of the reporting changes that it entails, leaving you to concentrate on managing and growing your business.

To discuss how we can help in greater detail, why not arrange your free initial consultation with us today and get the ball rolling.

Date published 3 Jun 2013 | Last updated 3 Jun 2013