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RTI: Why is it all changing?

Because with the current PAYE arrangements employers only tell HMRC what tax and national insurance amounts have been deducted from wages at the end of the year, HMRC are only able consider whether the correct deductions have been made under PAYE on a once a year basis.

With this new method, information will be supplied much more frequently, on or before wages payments are made and so HMRC will be able to make sure the correct deductions are made from pay much more frequently and so coding changes will be more up to date and more current than they are now.

RTI supports the introduction of the universal credit by giving the DWP up to date information about individuals pay and number of hours worked so that the information is not required independently. Athough there will be an improvement to PAYE collections, the real reason this is changing is because the government needs to introduce universal credits.

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