More than 10 years ago, Her Majesty’s Revenue & Customs (HMRC) launched the Employer CD-ROM as the first stepping stone supporting employers towards electronic business. Over the years the CD-ROM progressed from simply holding electronic versions of forms and helpbooks, to being a fully interactive product, containing guidance, learning packages, and a P11 calculator which enabled employers with nine or fewer employees to file their annual returns electronically. Originally accompanying a very weighty paper annual pack, this was gradually reduced until, along with the latest edition of the Employer Bulletin and an Employer orderline order form, the CD-ROM became the annual pack.
With the withdrawal of the CD-ROM and the introduction of Basic PAYE Tools (BPT), HMRC’s aim of guiding all employers towards online services is all but complete.
Employer CD-ROM
The CD-ROM gained popularity because it was a standalone product, containing virtually all the guidance, forms and tools an employer needed to fulfil their payroll obligations. With no need to connect to the internet, unless submitting annual returns, it wasn’t affected by security firewalls, could be installed on multiple computers; it could even be installed on a network.
But the CD-ROM did have its limitations. By the very nature of the fact that it was only issued twice a year, once before the end of the tax year, and once following the Budget, it could soon become out of date. Any errors could not be corrected, any legislation changes were not reflected until the next edition was due, and if anyone remembers back in 2008 when the 10% income tax rate was abolished, and then a few weeks later the personal allowances were raised to compensate, they will know that HMRC was forced to issue a third version that year. The CD-ROM’s stand alone feature was also its weakness.
And of course, there was the amount of space needed on a user’s computer system to best utilise all the features it contained. Although it could be run from disc which didn’t use up any memory, this restricted the features available.
Whilst the CD-ROM was very useful at supporting employers become more familiar with online business, it wasn’t as good at meeting HMRC’s other aim of reducing costs, and HMRC needed to move more of its business and interactions online. BPT fulfils that aim.
Basic PAYE Tools
BPT is downloaded from the Business Link website. Like the Employer CD-ROM it contains:
- An employer database on which to record employee’s details.
- A P11 calculator to work out and record employee’s tax, national insurance and student loan deductions every payday, with a linked P32 employment payment record that works out the amount to be paid over to HMRC.
- The ability to file forms such as P45 and P46, and for employers with nine or fewer employees at 5 April, P14 and P35 online direct to HMRC.
- A range of other calculators for such tasks as calculating Statutory Payments, including the new Additional Statutory Paternity Pay.
- Interactive forms such as P11D working sheets.
- A learning zone to help use and understand the calculators.
How does the new product fare in comparison to the very popular Employer CD-ROM?
The most notable difference between the Employer CD-ROM and BPT is that guidance does not form part of the BPT package. BPT is a web based product downloaded from the Business Link website. Users are expected to obtain the guidance they need to operate PAYE from Business Link and then download BPT to access the tools. This could be a mixed blessing, as one of the most popular elements of the old CD-ROM was that it contained all the guidance in one place and was much easier to find than on HMRC’s website.
But the most obvious benefit of this web-based product is its currency. When there are legislative changes or enhancements to software, the BPT may need to be updated. Users can download updates as soon as they become available so the information they have will always be up to date. In fact HMRC recommends that all users with internet access switch on the automatic update function which will ensure that they will always be running their payroll using the latest version of the tools. And to make doubly sure users are aware that an updated version has been published, HMRC are encouraging all employers to register for the email alert facility telling them that there is a new edition of the BPT available.
Another welcome improvement is that the learning zone modules, which previously took up a lot of the memory space on the CD-ROM, are now available to download individually, with users simply downloading the specific module they need. This is good news for those who didn’t previously use the learning zones but still encountered slow operating speeds because the huge learning zone files were an integral part of the product whether customers wanted them or not.
Previous users of the CD-ROM need not worry
There may be a lot of users, particularly small employers, who used the CD-ROM in the past to work out and record their employee’s tax and NIC deductions and who are worried about what happens to those records now the CD-ROM no longer exists. HMRC has made arrangements for these customers, and as long as they have downloaded the November 2010 update to their CD-ROM from HMRC’s website they can simply download and install Basic PAYE Tools and then transfer their existing Employer Database into the new Tools.
Employers who do not have internet access on their computer, or who connect to the internet using a dial-up connection rather than broadband can order a copy of the tools on disc by calling the HMRC Orderline on 08457 646 646.
Users should find that many of the features of the new tools are familiar to them, though it will be interesting to see whether the navigation on the website meets the needs of those used to the previous more intuitive guidance on the CD-ROM.
Further information
For other practical payroll articles in The People Bulletin, see:
‘Tax year-end tips’ by Diana Bruce of the CIPP, 31 March 2011.
‘Getting started’, Diana Bruce’s guide to new starters, 26 January 2011
‘At the finishing line’ – Diana Bruce’s guide to leavers, 9 February 2011
‘Sick pay – how it works’ by Adrian Hobbs, 24 November 2010