Change to data HMRC collects
HMRC has indicated that proposed change in law will likely require employers to report more detailed work hours from April 2025.
As part of ‘Change to data HMRC collects from customers’ published on 18th July, the proposal outlines three new compulsory data requirements with a failure to provide resulting in potential penalties of £60.
This measure is about changes to the data HMRC requires from employers, some shareholders in owner-managed businesses, and customers who are self-employed.
Worked hours
This new measure confirms that from no earlier than tax year 2025 to 2026, employers will be required to provide more detailed information on employee hours worked using Real Time Information PAYE reporting.
The government took the view that ‘Employers are already required to keep records of the hours their employees work to satisfy NLW and NMW rules, and in some cases display this information on payslips. Respondents also confirmed that employers will hold details of contractual hours worked for payroll purposes.’
Dividend and ownership share
Secondly, shareholders who are company-owner managers in owner-managed businesses will need to use their Self Assessment tax return to provide both:
- the amount of dividend income received from their own companies separately to other dividend income
- the percentage share they hold in their own companies
Self employment start and end
Finally, customers who are self-employed will need to provide information on the start and end dates of their self-employment using their Self Assessment tax return.
Improving HMRC data!
The changes are claimed to be needed to help improve the quality of data collected by HMRC and help to:
- provide better outcomes for taxpayers and businesses
- improve compliance
- build a more resilient tax system
What are the current working time reporting requirements?
Currently, normal hours are reported in bands to HMRC:
Does payroll know what is work time?
In some cases maybe, but in many cases no. This was a reason that the normal hours bandings were introduced in 2013 when RTI went live.
So employers are now faced with keeping more granular data, potentially for all staff. Including those salaried.
Now there are differences between: worked time, paid time, and absence time.
Paid time may be a mixture of proportions of paid work time and paid absence time, but may not be all worked time or absence as proportions may not be paid.
Equally, not all absence time is paid and lots of retrospective correction may be required with payments in advance, arrears and corrections due to late notification of absence or adjustments to shift lengths etc.
Is this to aid identifying minimum wage breaches?
It’s true that one of the main reasons for those named and shamed is a failure to have the average rate paid for work time (paid and unpaid work time), to meet the minimum pay requirements. The governments concern may be more widespread than imagined.
PAYadvice.UK has a number of minimum pay resources which cover the subject:
Will there be a boom in Time and Attendance (T&A) systems
These new requirements will see employers having duties for more accurate work time recording. With such a mobile and technology driven workforce with email, text, and mobile work communications prevalent, how and what will be considered as work time to be recorded and reported?
Some of the former T&A practices of 15 minute rounding already require change. Many retail and other industry types fail to pay for preparation time or require staff to be on premise sometime before open and close times, yet do not pay for required work-time for minimum pay purposes.
We may well see significant redesign and increasing use of a variety of T&A solutions.
PAYadvice.UK 22/7/2023