The latest version of the full business case for PAYE Real Time Information shows a cost of £273.84 million for the spending review period to March 2015.

RTI is the most significant change to PAYE for 70 years, and it is going well. By 22 April over 625,000 schemes were being reported in real time. The business case for RTI is very strong and pays back by the end of 2014-15, including savings of £500 million for customers and HMRC by that point.

The universal credit system will assess the payment to be made to a claimant monthly. Earnings used to calculate the universal credit payment will be determined from real time information (RTI) data received in the assessment period and any earnings reported by the claimant.

HMRC recently announced a temporary relaxation, until 5 October 2013, of requirements for reporting PAYE data for small firms employing fewer than 50 people. This recognises that those smaller employers who pay employees weekly, or more frequently, but only process their payroll monthly, may need longer to adjust their process to reporting PAYE in real-time.

This relaxation runs for a period of six months, broadly coinciding with the UC Pathfinder, during which we expect the number of employers of UC claimants to be relatively small. We will be utilising RTI data for claimants where this is possible. Where RTI is not available we will have alternative clerical processes to ensure their awards are based on accurate and up-to-date earnings information. Based on our knowledge of employers recruiting in the pathfinder area, we would not expect the relaxation to have a significant effect. We will, however, be monitoring this closely during the Pathfinder.

In developing PAYE Real Time Information (RTI) HMRC has worked closely with employers, their representatives, payroll bureaux and agents to understand the impact of RTI. As a consequence of these consultations they recognise that some small employers who pay their employees, more frequently, but currently only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a transitional relaxation of reporting arrangements for small businesses. However, all businesses will still be required to report real time information at

the time of their payroll or at the very latest by the end of the tax month. Working with representatives of small business and the accountancy profession, HMRC agreed this as an appropriate easement at the start of this transitional year for RTI in which they are supporting all businesses through the implementation without the threat of penalties.

HMRC have no plans to extend this reporting relaxation beyond 5 October 2013. They will, however, continue to work with employer representatives during the summer to assess the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work and Pension's universal credit.

The Tax Information and Impact Note (TUN) published on 15 March 2013 included an updated assessment of the impact RTI will have on small business.

HMRC has commissioned independent research exploring the impact of PAYE Real Time Information on all employers in the pilot including small firms. This research is looking at confidence levels, ease and the overall impact of RTI on the employers’ businesses. The findings will be used in conjunction with a wider evaluation of the pilot, which will include an assessment of the impacts on HMRC. The TIIN will be updated later this year using that evidence.

In the meantime HMRC has recently announced a relaxation of the on or before reporting arrangements for small businesses for a transitional period.

Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run, but no later than the end of the tax month (5th).

[holding answer 17 January 2013]: HMRC's strategy for the latter months of the RTI pilot has been to focus on bringing on the largest PAYE schemes (by

number of employments). They have also encouraged new PAYE schemes to start operating RTI as soon as they start paying employees.

HMRC do not hold data for the specific dates requested. The following table shows the number of PAYE schemes participating in the pilot at the end of tax months.

HMRC now project that, by the end of March 2013, the RTI pilot will cover around 6 million individual employments. Most employers and pension providers, who have not participated in the pilot, are expected to start submitting RTI from their first payday after 6 April 2013. This means that employers or pension providers who pay quarterly or annually, or only employ staff on a seasonal basis, may not join RTI until later in 2013-14.

As part of the development of PAYE real time information (RTI), HMRC have been running a pilot with employers. To date, there are over 28,000 employers in the pilot with nine or fewer employees, of which over 12,000 have one employee.

HMRC have also commissioned independent research exploring the impact of RTI during the pilot. This research is looking at confidence levels, ease and the overall impact of RTI on the employers' businesses. The findings will be used in conjunction with a wider evaluation of the pilot, which will include an assessment of the impacts on HMRC.

HMRC will publish an updated Tax Information and Impact Note (TIIN) in mid March 2013 which will contain information on the costs and benefits of PAYE Real Time Information for both employers and HMRC.

The first universal credit claims will not be made until April 2013 in the pathfinder area and so, as yet, no universal credit award has been made nor has any award calculation been made on the basis of a real time information pilot record, correct or erroneous.

The RTI pilot will run until 5 April 2013. HMRC plan to complete their evaluation of the RTI pilot in summer 2013 and intend to publish a summary of the outcomes.

When UC award calculations become possible, for the purposes of a particular universal credit assessment period RTI that is erroneous will be:

on time and wrong;

missing; or

late

For the universal credit pathfinder period the system will deal with these as follows:

The effect of wrong data is that the system will calculate the payment based on the earnings reported by the employer, if the claimant disputes this there will be a mechanism for correcting this.

If RTI is missing for one month the payment will be calculated on the basis of the earnings reported at the point of assessment. If there are two consecutive periods with no report of earnings the claimant will be contacted and required to self-report earnings.

If RTI is submitted one UC assessment period later than it should have been, it will be taken into account in the period in which it is received.

The effect of claimant and employer behaviour will be kept under review during the pathfinder period.

I refer the right hon. Member to the answer I gave on 17 December 2012, Official Report, column 563W.

HMRC are currently collating the data for subsequent months and this data is therefore not available at this time.

The RTI pilot will run until 5 April 2012. HMRC plan to complete their evaluation of the RTI pilot in summer 2013 and intend to publish a summary of the outcomes.

[holding answer 17 January 2013]: The number of hashes received by HMRC from employers in the real time information (RTI) pilot was 14,043,776 at 10:48 am on 16 January 2013. All of these hashes were submitted within RTI returns accepted through the Government Gateway or EDI channels.

Under PAYE real time information (RTI) employers will report PAYE information to HMRC each time they pay their employees. RTI relating to universal credit (UC) claimants will be shared with Department for Work and Pensions (DWP) who will use the data to calculate the amount of credit due.

The RTI pilot is going well and research findings indicate that the majority of employers have found it works well for them. HMRC is on track for around 6 million individual records covered by the RTI system by the end of March 2013. The pilot has also been successful in proving the technology works.

A fully scoped test plan is currently in place to test the IT interface between DWP and HMRC, with the interface having been tested successfully last year.

As the RTI pilot progresses through to national implementation from April, alongside the universal credit pathfinder from late April, HMRC and DWP are working

closely together to monitor RTI returns, data quality and ensuring RTI data meets the needs of universal credit.

Hash matching provides HM'RC with an additional layer of assurance and allows comparisons to be made between the payment to the employee's bank account via Bacs under a service user number (SUN), and the net pay amount reported in a real time information (RTI) return. Successful hash matching is not a prerequisite for tax calculation. Many employees will be paid by payment methods other than Bacs under a SUN. Hash matching is not possible for these payments.

Hashes included in RTI returns may be unmatched for a number of reasons. HMRC will analyse patterns on non-matching for PAYE schemes and feed this into the pool of risk assessment information used to target employer compliance activity.

Similarly, hash matching accuracy rates will not effect individual UC calculations. However, DWP will use the information for risk assessment and high proportions of successfully confirmed payments will support more robust risk assessment by DWP.