Small businesses have their heads in the sand over PAYE

Published:  22 February, 2013

Small businesses have their heads in the sand when it comes to Real Time PAYE, according to new research from Intuit, the small business accounting, payroll and payments specialist.

Intuit’s national survey of over a thousand PAYE-registered businesses revealed that while nearly 60 per cent of employers are now aware of real time PAYE, through communication from HMRC or other sources, less than a third (32 per cent) have actually taken any steps to prepare. That figure drops to 26 per cent for sole traders.

This inertia appears to be driven by confusion and complacency, with one third (35 per cent) not taking any steps because they don’t know what they need to do, and one third (33 per cent) because they feel they have plenty of time to make arrangements.

The changes to payroll mean that employers will have to start reporting PAYE information to HMRC in real time from 6 April 2013 and have been the subject of a significant communications push by HMRC.

Despite the campaign, many businesses are still unsure they will be ready for the changes, with a third (31 per cent) of all micro businesses – firms with less than 10 employees – citing they have little or no confidence that they are ready for the changes. Compared to a figure of only 15 per cent of larger SMEs (10-49 employees) feeling the same way, it is clear that the smallest of the UK’s 4.6 million micro-businesses are finding the changes hardest to digest.

Interestingly, small businesses using commercial software are much more confident that they are ready for the changes (83 per cent) opposed to just 43 per cent of organizations that run their payroll systems manually.

With the deadline looming, employers have less than 30 business days to get ready, which means ensuring all employee information is accurate and up-to-date, registering for PAYE Online, checking or upgrading payroll software to ensure it is compliant or talking to their payroll service provider. HMRC provides a complete checklist of the steps.

The changes to the payroll system may appear daunting to small business owners trying to juggle the pressures of running their company. But according to Diana Flier, payroll product manager at Intuit, the steps they need to take are actually very simple. She said: “Small businesses know they have to take action to be compliant, but want a quick, easy fix. That’s why we built a simple Wizard in our QuickBooks payroll software to guide employers through the process by following three easy steps. Now they can file all the required information with HMRC in one easy click, every time they run payroll.”

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