FreeAgent and PAYE Real-Time Information!

Ah 1944: I remember it well…

There were a couple of things going on in Europe that year, but most people remember it as the year Jerry Springer was born and Pippi Longstocking made her first appearance in print.

Here at FreeAgent that year is primarily famous as being the year Pay-as-you-Earn (PAYE) was introduced. Designed to boost the country’s depleted wartime coffers, it ushered in a new era of Tax Codes and P14s and P35s and P45s etc etc which has been with us ever since.

It’s always been a bit unwieldy but until recently improvements were thought to be too hard to implement.

Now technology has finally caught up and next year sees probably the biggest change to PAYE since its introduction: Real-Time Information. From April 2013 onwards employers will be legally required to submit the details of each salary payment to HMRC at the same time as it’s made.

It’s a positive step, removing the need for end-of-year forms and making the system more accurate. It’s also necessary for the Government’s simplified Universal Credit scheme planned for next year.

But change is always tricky, isn’t it? Our plan is to make this one fairly straightforward.

Soon after FreeAgent launched in 2007, we introduced a Basic UK Payroll suitable for very simple freelance and contractor businesses. It doesn’t handle calculations of deductions other than tax, and there’s no facility to produce or file end-of-year forms, but it was enough to generate payslips for those businesses and our users have really welcomed having it as an integral part of FreeAgent. We directed businesses with more complicated payroll requirements to other software.

We’ve done a lot of thinking about payroll recently, especially in the light of RTI’s introduction. And we still believe it’s important to have a simple way of dealing with payroll if you’re a tiny company.

Firstly, we’ll be allowing users of the HMRC’s free Basic PAYE Tools (which will also support RTI) to upload payslip data into FreeAgent. Despite the ‘Basic’ in the name, it’s a pretty comprehensive offering for employers with up to 10 employees, which means there’ll be a free way to handle payroll that’ll also work well with FreeAgent.

We’ll also be opening up our Payslips API well before the April deadline, so that other payroll software providers can push payslip data automatically and directly into FreeAgent. They’ll handle the RTI submissions at their end, and we’re already talking to a number of companies who are really keen to work with us.

And importantly, we’ll be working towards extending our existing payroll system to support RTI, at the same time switching to a new calculation engine which will be approved under the HMRC’s PAYE Recognition Scheme. We’ll do our level best to have that ready in time for the April 2013 deadline.

Early next year we’ll be able to tell you more about the which providers will support our Payslips API, as well as give you an update on our own FreeAgent Payroll RTI efforts.