RTI - HMRC update on annual PAYE schemes

HMRC have provided an update regarding annual schemes and RTI, covering which employers can join the scheme, what to do once in the scheme and details of a software glitch that is temporarily stopping employers joining the scheme.

The message from HMRC states: 

START

Dear Stakeholder, 

Annual Schemes

As you are no doubt aware, where an employer pays employees annually in a single tax month, they can ask HMRC to treat their PAYE scheme as an ‘annual scheme’. 

Further information about these arrangements can be found at http://www.hmrc.gov.uk/payerti/reporting/when-to-report.htm#6

With the move to reporting PAYE information in real time, we have noticed an increase in the number of employers/agents requesting that schemes are now registered as annual schemes. Some of these requests do not meet the requirements for an annual scheme, so can I ask you to remind your clients to ensure that the scheme does meet the requirements before requesting it be set up as one. 

An annual scheme is one where all the following criteria are met: 

  • All the employees are paid annually; 
  • All the employees are paid at the same time/same date; 
  • The employer is only required to pay HMRC annually. 

We would also like to remind you that, once a business is registered as an annual scheme, Employer Payment Summary returns are not required for the 11 months of the tax year where no payments are made to the employees. 

That process is working as intended for schemes already registered as annual schemes. Our debt management system will already have a record of the month the employer is due to pay based on returns for previous years. This information will be transferred to our new accounting system and be recorded as the annual payment/filing month. 

If the employer changes the date/month of payment (that is, either changes the date/month of payment to the employee(s) or has previously submitted payment to HMRC in a tax month after payment has been made), the Full Payment Submission (FPS) should be completed for the month that the payment is made to the employee(s) and the annual payer details completed. On receipt of the FPS our system will change the annual payment / filing month over to that month. So if the employer wishes to change their annual payment / filing month all they need to do is to submit a FPS for the correct payment / filing period. For example, if we had set the annual month as 12, and the employer submitted a FPS in month 10, our system would change the annual payment/ filing month to 10 for the current and future years. 

However, we need to make it clear that schemes not registered as annual schemes will need to submit ‘NIL’ EPS’/period of inactivity EPS’ for each month. This will also apply to schemes where the employer/agent intends to apply for a scheme to become an annual scheme – in which case they will need to submit ‘NIL’ EPS/period of inactivity EPS’ until the registration has been accepted as an annual scheme. 

Having said the above, we have identified an issue with the annual schemes registration process. A fix to rectify the problem will be implemented shortly but, in the meantime, please follow this guidance: 

  • If the employer’s annual payment month falls between June 2013 and March 2014, then employers and agents have two options until the fix is implemented: 
    • either register the scheme and complete an EPS showing a period of inactivity, then contact us once we have announced the fix is in place to get scheme changed to annual status; or
    • hold off from registering the scheme until we have announce that the fix is in place. 
  • if the employer’s annual payment month is April or May they should register the scheme, submit the Full Payment Submission for payments made in April or May and a ‘NIL’ Employer Payment Summary for the other month; 
  • We have kept a record of the employers/agents who have already contacted us to record the request to change to an annual scheme and will action these cases once the fix is implemented. 

The move to RTI continues to go well and we are grateful for all your support so far. 

Go to hmrc.gov.uk/rti for more information about RTI.

END of HMRC message

Technical Team

Posted in: News