HMRC plan to introduce radical changes to the PAYE system. HMRC have published a consultation document “Improving the operation of Pay As You Earn: Collecting Real Time Information”.

PAYE real time information means employers will send HMRC information about tax and other deductions from employees’ pay when the employee is paid, rather than at the end of the year as at present. The Exchequer Secretary to the Treasury, David Gauke MP, said: ‘We are determined to improve the way the PAYE system works and real time information has the potential to reduce burdens on employers’. HMRC’s Stephen Banyard, Acting Director General Personal Tax, said: ‘We are working closely with customers to develop the real time information system. We will pilot the system from April 2012 and begin to move employers onto the new system in stages over the following 18 months. We expect all employers to be using the new system by October 2013.’ The government welcomes responses to the issues and questions raised in this discussion paper by 28 February 2011. We will keep you informed of developments.