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HMRC have dropped plans to build on their forthcoming real-time information (RTI) initiative with a system of centralised deductions of PAYE levies.
Considered by the Revenue to be a ‘further, more radical, option’ to serve as an extension to RTI, the idea was proposed in July last year in the discussion document Improving the Operation of Pay as you Earn.
Centralised deductions – mooted in chapter five of the paper – would have shifted the responsibility for the calculation of income tax and National Insurance contributions away from employers, placing it fully with the taxman.
However, the plan has been rejected, the Exchequer secretary to the Treasury, David Gauke, today confirmed, according to Pay & Benefits magazine.
At a briefing hosted by HMRC and the Department for Work and Pensions, Mr Gauke, said, ‘We are pursuing real-time information. We are not pursuing centralised deductions.’
His announcement puts paid to a recommendation by the All-Party Parliamentary Taxation Group, which in its latest report, PAYE at the Crossroads, claims the implementation of centralised deductions ‘would remove most of, if not all of, PAYE’s negative dimensions’ and ‘revolutionise the way that citizens interact with the state’ [sic].
The group’s paper also hints at the benefits of delay to the full launch of RTI, which is currently expected to be UK-wide by autumn 2013.
But Pay & Benefits reports Mr Gauke saying, the initiative is ‘on track and going well. We are optimistic it will deliver to the timetable.’
