Simplified PAYE schemes going, going, gone - soon!

Published on 8 December 2011

Draft regulations published by HM Revenue & Customs (HMRC) in November herald the phasing out of Simplified PAYE Deduction Schemes (SPDS) still used by some non-business employers. Whilst LITRG agrees that these no longer are the ‘simple’ option for PAYE calculations they once were, changing to the system used by all other employers may cause difficulties. We welcome the opportunity being offered by HMRC for all SPDS employers to give their views on how these changes will affect them.

When the new PAYE system of deduction of tax and national insurance contributions at source was introduced in 1944, a ‘simplified’ system was offered to non-business employers often referred to as the ‘domestics’ scheme.

Over the years additional obligations placed on employers, such as Statutory Sick Pay and Maternity Pay and other changes to PAYE itself, have meant that these schemes no longer offer a ‘simple’ option. However they remain a paper based alternative and for some of the 14,500 employers who currently use them this is a valuable option.

What is going to happen and when?

The draft regulations which have just been issued allow for the SPDS scheme not to be offered to new employers from 6 April 2012. In recent years, many of those who employ a carer or personal assistant in their own home have been offered these schemes where they wish to run the payroll themselves.

The scheme will be closed on 5 April 2013. For the 2013-14 tax year all previous users will be subject to the same PAYE regulations as other employers.

From 6 April 2013 a new PAYE system, Real Time Information (RTI), is being introduced.

What will these changes mean?

For care and support employers it will still be possible to use a paper based option to record and file end of year and in year PAYE information. However with the move to RTI on 6 April 2013 a system of monthly filing of information is being introduced and LITRG is working with HMRC to try and ensure that these employers are given the help and support they need to achieve this.

Other users of SPDS will only be able to file electronically, from 2013-14, all their documents using either HMRC’s free employer Basic Tools payroll software or a commercial payroll software package, most of which have a cost attached. HMRC do provide a list of accredited software products on their website.

What can I do?

A first round of letters has been sent out by HMRC to all 14,500 employers who use SPDS alerting them to these changes. HMRC have asked for comment to try and identify the effect the closure of the schemes will have on individual employers so as to consider what support or adjustments are needed, particularly to help them move to the new system of PAYE.

Comments are asked for by 9 January 2012 and should be sent by post to Donna Todd, HMRC, 100 Parliament Street Room 1E/07 London SW1A 2BQ or by email todonna.todd [at] hmrc.gsi.gov.uk .

Alternatively (or in addition) we would be pleased to learn of your concerns

(08-12-11)

Contact: Jan Tish (please use form at http://www.litrg.org.uk/ContactUs)