EMPLOYERS will soon face a major change in the way they have to handle payslip data.

From October 2013, they will be required to use a new system, which will see payslip data on tax, NIC and other deductions transmitted to HM Revenue & Customs (HMRC) when employees are paid, rather than once year – consigning P45s and other such forms to the history books.

It is part of the introduction of Universal tax credits, also in October 2013, as Governments reforms of the social security system.

Accountancy giant PwC said modernisation of the PAYE model, introduced in the 1940s, should help to prevent tax code errors. But it is concerned about the timescale for the change over.

Susan Blair, senior manager at PwC in the North East, said: “The modernisation of PAYE is long overdue.

“The system dates back to the end of the Second World War when most people had one job, often for life, and were paid in cash. Given complex working patterns today it’s surprising it’s coped as well as it has.

“However, we could be heading for a perfect storm given the scale and timing for change. Real Time Information will see employers gathering and transmitting considerable volumes of data.

“Timescales are incredibly tight for getting the processes in place across the many parties involved. All this will be happening when many employers will be grappling with the challenges automatic pension scheme enrolment presents. Yet the launch of Universal Credits means there’s no leeway on timing. There is likely to be confusion among employees as they get used to ‘leavers statements’, which will replace P45s.”