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HM Revenue & Customs want your advice

27 July 2010

HM Revenue & Customs (HMRC) want to hear taxpayers' views on how the Pay As You Earn (PAYE) system can be made more efficient. 

In a consultation launched today, HMRC is looking at how more frequent or “real-time” PAYE information could support the tax and welfare system.

The document, Improving the Operation of Pay As You Earn (PAYE), describes the options for real-time information and a longer term one of “centralised deductions”, which could move the burden of tax calculation away from employers altogether.

HMRC believes this real-time information would:

  • make it easier to ensure individuals pay the right tax after a change of job and possibly remove the need for the P45/P46 procedure;
  • offer the prospect of simplifying the PAYE end-of-year reconciliation process for employers and HMRC;
  • allow income related benefits and welfare payments to better reflect the current circumstances of the individual;
  • remove much of the uncertainty that leads to errors in the tax credits system.

Exchequer Secretary David Gauke MP said: “The launch of the Office for Tax Simplification marks a very important step towards making the tax system work better. But simplification mustn't stop there.

“The PAYE system needs to respond better to the circumstances of the individual taxpayer, because only in this way will we be able to reduce errors and provide taxpayers with the clearest picture possible of their tax and allowances. We also need a PAYE system that reduces the burden on employers.

“We would like to hear from all who have views on how a real-time system could best meet their needs, to ensure that we deliver a 21st century PAYE system.”

Stephen Banyard, HMRC’s Director of the Business Customer Unit, added: “We have improved the PAYE system in recent years but it is essentially the same process that was designed in the 1940s. We want to explore how the PAYE system could be improved to make it easier for employers and HMRC to administer.

“We want the people who use the system every day – employers and payroll providers – to give us their views on the collection of real-time information.”

Click here to access the consultation document. The deadline for responses is 23 September 2010.



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