HMRC ran a consultation on improving the data it collects from its customers last year, which closed in October. A summary of responses was issued on 27 April as part of Tax Administration and Maintenance Day, giving us an idea of the changes likely to be coming to employers in the near future.

Aspects of the consultation affecting employment data included looking at whether employers should have to report more data around employees’ occupations, hours and location of work.

These proposals were intended to help HMRC and the Government better understand what work employees were doing and where, so that skills shortages and pay inequalities (including gender or regional discrepancies) could be identified and addressed. More data would also give HMRC a better picture of employers’ circumstances, which could help inform their future tax compliance approach, as well as help them target support measures such as those seen during the Covid-19 pandemic.

The consultation response confirms that new legislation will be introduced with the aim of better capturing the hours worked by employees. The proposal is that the exact number of hours paid will be reported as part of Real Time Information (RTI) submissions, rather than banding them into ranges (e.g. Band B currently covers anything from 16 to 23.99 hours). Contractual hours will need to be reported for salaried employees, whilst for hourly-paid workers the actual hours worked will need to be declared.

This requirement is not expected to create significant extra administration for employers – who should already have details of employee hours worked – and will help the Government better understand the labour market, including pay variations and compliance with the National Minimum Wage obligations. HMRC intends to engage with businesses and software providers in advance of the proposed changes to agree relevant definitions and requirements, and to ensure sensible timescales are set.

Other ideas explored by the consultation included requiring employers to report data on employee location, sector and occupation on an individual employee basis as part of RTI submissions. However, based on responses to the consultation, the Government has decided that this would create disproportionate administrative burdens for employers, so will not go ahead with this proposal.

Overall, whilst the introduction of greater reporting requirements for hours worked will add a little complexity to the payroll process, the feedback to the consultation appears to have saved employers from a potentially far bigger administrative burden.

 

This article reflects the position at the date of publication (19 June 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since. 

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