Consultation into possible PAYE shake-up launched

David Gauke, the Treasury minister, has launched a consultation on how PAYE can be improved.

As reported by Real Business, the pay-as-you-earn system is used by around two million employers and accounts for over 30 million employees.

It's claimed that Gauke's idea is that the burden of PAYE payroll administration should be shifted away from employers. Currently faced with deducting employees' income tax and NIC’s directly at source, it's the employer's responsibility to calculate the amount due. It's a burden that most employees would be glad to be free from.

Gauke said: "The PAYE system needs to respond better to the circumstances of the individual taxpayer because only in this way will we be able to reduce errors and provide taxpayers with the clearest picture possible of their tax and allowances. We also need a PAYE system that reduces the burden on employers.

During the general election the conservatives talked about introducing an automated system that would deduct tax and NIC’s directly from employee's gross pay as it is paid into their accounts. They estimated that it would save businesses £5.5 billion and increase Treasury revenues by £1 billion.

According to Financial Advice, it's just one of nine tax consultations launched on the last day of parliament before the summer recess. Other tax issues to be discussed include minimum wage and inheritance tax.

Gauke was quoted by The Telegraph as saying: "We are committed to a more considered and open approach to tax policymaking. That is why consultation and scrutiny of our tax policies will be the cornerstone of our tax policymaking process."