Tax Rebates & Refunds

Changes to the PAYE system – what you need to know

April 6, 2013
Posted in Income Tax — Written by Geoffrey

In the new tax year, the way that employers report income tax information to HMRC, the department responsible for income tax and tax rebates, is changing. Here is what you as an employee need to know about the change to the PAYE system.

PAYE explained

At present, all UK employed workers are paid through the Pay As You Earn (PAYE) system. This method consists of employers deducting income tax and national insurance at source from their worker’s salaries, using a tax code given by HMRC for each worker to calculate the deductions.

What is changing?

At the start of the new tax year, which begins on April 6th 2013, the system is changing from standard PAYE to something called Real Time Information or RTI. This will require employers to report employee’s income tax information to HMRC in real time. The change is happening because annual reporting no longer reflects peoples’ changing work patterns.

Will the change affect me?

As an employee, you don’t need to worry too much about the change to RTI systems. It is employers who will have to upgrade their payroll systems, but it could mean that workers tax deductions are more accurate and that there will be less need to chase up tax rebates.

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