TWO days before last month’s Budget I spent the morning at the Treasury helping to finalise an agreement with ministers that has helped tens – maybe hundreds – of thousands of small businesses.

Over the past few months I have written a number of times in the County Gazette about the changes to PAYE that the new Real Time Information (RTI) system will bring.

RTI went live on April 6 and affects virtually all employers.

Under the old regime, employers had to send HMRC details of payments made to employees and the tax and national insurance deducted once a year.

Under RTI that information has to be sent electronically to HMRC every time the payroll is run.

The Department for Work and Pensions needs the information to enable it to operate the new Universal Credit.

It will also help HMRC to improve the accuracy of PAYE coding notices.

Another effect is that HMRC will know every month how much tax and national insurance an employer owes and any business that has been in the habit of paying PAYE over to HMRC late will find that HMRC will be chasing more quickly and more effectively.

If you have read my previous pieces on RTI you will know that my main concern has been the ‘on or before’ rule which requires employers to run their payroll and to report to HMRC on or before the time a payment is made to an employee.

There is a relaxation to ‘within seven days’ in some very limited situations but the rule would still result in many employers who have run their payrolls monthly having to do so weekly, requiring 52 payroll runs instead of 12.

After a great deal of lobbying, the Government agreed last month to allow employers with fewer than 50 employees to continue to report monthly, at least until October.

Between now and then we will try to persuade the Government that the relaxation should be made permanent.

If you are an employer and you are uncertain about the impact RTI will have on you, a wealth of information is available on the HMRC website – including recently re-written guidance in respect of farmers employing harvest workers.

RTI represents the biggest change to the PAYE system in decades and a number of practical issues have yet to be resolved. If you find the changes daunting, you should – as always – talk to your accountant.

Paul Aplin OBE is a tax partner with A.C. Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty; you can follow him on Twitter @PaulAplinOnTax. He and fellow tax partners Amanda Gunter and Paul Kingdom can be contacted on 01823-624450.