HMRC has announced that some of the planned changes to Real Time Information (RTI) reporting requirements will be delayed to 2026 at the earliest.
RTI reporting for payroll data was in the process of being revised following a Tory government led consultation in 2022, with a view to improving the range of data that was collected by HMRC.
Under the proposals, employers were to provide more detailed information to HMRC via both income tax self assessment (SA) forms and the RTI returns completed by them. There were three main areas where payroll reporting was to be revised, as follows:
- Details of start and end dates of self-employment;
- Amount of dividend received by shareholders in owner-managed companies;
- Actual number of hours worked by each employee.
It is the last requirement that has proved the most contentious and resulted in the delayed introduction of the new rules. According to the new proposals, rather reporting the hours worked by employees according to a banded range, the revisions required the actual or contractual hours worked by employees to be detailed in full. This would not only ensure that employers are paying their workers according to correct national minimum wage (NMW) rates, but also ensures accurate amounts of employer and employee NICs are being paid.
On 15 August 2024, payroll and accounting system software developers were notified by email that HMRC would now be postponing the start date for additional reporting of employee hours worked until at least April 2026. This would give payroll professionals time to get to grips with the changes. The email stated:
“Due to delays owing to the general election and the lead-in time required to upgrade software and processes to prepare for implementation, employers will now not be required to start providing more detailed employees’ hours data through PAYE Real Time Information returns from April 2025. This requirement will not apply until April 2026 at the earliest. Final decisions on whether to go ahead with the regulations and any timelines will remain subject to decisions by the new government.”
Given that this was a Tory government policy it is possible that it will be postponed indefinitely now that Labour is in power.
HMRC has also confirmed that the proposals for businesses to provide data on start and end dates of self-employment and amount of dividend paid to company shareholders are also being reconsidered. However, HMRC has also indicated that implementing these two changes by April 2025 should be achievable and may go ahead, with just the requirement to provide full employee working hours being delayed.
Unless further information is released by HMRC stating that all three components of the new RTI payroll reporting requirements are being postponed, businesses should continue to plan for the other two changes to take effect. This will commence from April 2025.
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