Employers will be PAYEing for the next 5 years

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London, 14 November 2011: “With Real Time Information (RTI) due to come into force in April 2013 and the announcement today that National Insurance Contributions (NICs) and income tax will integrate in 2017, employers are facing five years of continuous changes and cost. Whether you are a small company or a large PLC, this is going to mean thousands of pounds in new software, systems and personnel training.

“Based on HMRC’s timetable, we won’t know the extent of the changes to income tax and National Insurance for at least another three years, when the legislation is drafted and passed through Parliament. This will however allow time for consultation and for the Revenue to understand the full implications of these measures have, not only for employers but also for HMRC’s own staff. It is also envisaged that it will take a further two years for systems changes to be implemented by both employers and the government departments affected.

“It is positive to see that the Revenue are being realistic about the time it needs to get its own house in order. This isn’t just a tax issue; it will impact processes relating to contributory benefits, including the state pension and other statutory payments such as maternity and sick pay.

“One of the most common issues cited by respondents to the Revenues call for evidence was the different definition and treatment for earnings and expenses; for example there are different rules for tax and NIC relating to termination payments and benefits in kind.

“Will this result in a major overhaul of the National Insurance system? Almost certainly. However, whilst the Government will not wish to undertake a full merger of the tax and National Insurance regimes, a major reform of NIC is still required to suit the employment market in the 21st century which is now much more transient and international in its nature.”

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