The PAYE Modernisation Project has made the most significant changes to the Pay As You Earn system since its inception in 1960. Beginning 1 January 2019, employers will now have to calculate and report employee pay and required deductions in real-time.
The new PAYE reporting will help employers ensure they are correctly calculating income tax, pay-related social insurance, universal social charges, and local property taxes. It will reduce the burden on employers to maintain this data and meet the PAYE annual reporting deadlines, as the payroll data will now be reported in real-time. Employees will benefit from the new system because the deductions will now be calculated at each pay period, so employees will not over or underpay taxes.
Due to the new PAYE modernisation, employers will no longer be obligated to report or generate P30s, P45s, P46s, P35s, and P60s. Employers will not be able to submit the P35 payroll file at the end of the tax year. This is the final year to submit the P35 returns, so employers and payroll teams must prepare now to begin the new PAYE reporting procedures by 1 January. If you currently use manual processes to manage payroll, the new PAYE reporting will require additional time and resources from your team. There are compliance penalties for each reporting failure, so it is vital to ensure your payroll process is accurate and can accommodate the new requirements.
Payroll software can ease the administrative burden and reduce human error. To learn more about how Payescape can simplify your payroll and reporting to prepare you for PAYE modernisation, click here.
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