Only a quarter of sole traders are ready for real-time PAYE, research shows.

Monday 25 February 2013

Three-quarters of sole traders have not yet prepared for submitting real-time payroll information to HMRC, according to research.

Just 26 per cent have taken steps to get ready for the changes to pay as you earn (PAYE) tax, the study by business software provider Intuit shows.

While the findings demonstrate that around six out of ten employers are now aware of the changes to the tax system, which come into effect from the start of the new tax year in April, just under a third were in a position to deal with them.

Employers will have to send payment information to HMRC on or before the day when the payment is processed. To do this, a Full Payment Submission will have to be completed and sent in online, which payroll software should be able to do.

This means that end of year paperwork such as the P35 and P14 are no longer necessary, while for those who have employees, starting and leaving processes are simpler.

Many employers and sole traders appear to lack adequate information on how to prepare, since 35 per cent said they had not yet taken action because they were unsure what they were expected to do. However, only a slightly lower proportion said that they simply felt they still had plenty of time to make the necessary adjustments.

Smaller businesses clearly feel the least secure in the changes, since 31 per cent claimed to have little or no confidence that they are ready - double the proportion of larger businesses who responded, possibly because smaller businesses are less likely to have payroll or tax expertise among their staff.

HMRC has publicised the changes heavily in recent months and has published a printable checklist on its website to help companies prepare. Sole traders can use any of the free payroll software packages provided on the website, which are acceptable for use with nine or fewer employees. Those who are planning to send their own returns will also need to register with PAYE online to receive their login details if they have not done so already.

By Victoria McDonnell

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