HMRC Scraps Reporting of Employee Additional Hours Data

HMRC has decided to scrap plans that would have required employers to report more detailed employee hours data through Real Time Information (RTI) returns.

Employers can now breathe a sigh of relief, as they will not need to adapt their payroll systems for additional reporting requirements. With Making Tax Digital for income tax on the horizon, this decision removes one potential compliance challenge for businesses from 2026. This move comes after extensive feedback highlighted the significant administrative burden such changes would impose on businesses.

Planned Changes Abandoned

The proposed changes were initially set to take effect from April 2025 but were later deferred to April 2026 due to the general election and the "lead-in time required to upgrade software and processes." However, following extensive industry feedback, HMRC has now confirmed that these plans will not be going ahead at all.

Official HMRC Email

In an email, HMRC’s Software Developer Support Team (SDST) confirmed:

“Employers will no longer be required to provide more detailed employee hours data through Pay As You Earn (PAYE) Real Time Information (RTI) returns from April 2026 as previously proposed.

The government has listened to feedback and acknowledges the potential administrative burden highlighted by businesses. Therefore, the draft Income Tax (Pay As You Earn) (Amendment) Regulations 2024 intended to bring in these new requirements will not be progressed further.

The government remains committed to data transformation and will continue to focus on other initiatives delivering improved data, including Making Tax Digital for ITSA, digitalising business rates, and investing in our IT infrastructure.”

What This Means for Employers

While the reporting changes will not go ahead, employers must still maintain records of actual hours worked for national minimum wage calculations.

Although this decision reduces the compliance burden for businesses, employers should continue monitoring payroll regulations and be prepared for other digital transformation initiatives led by HMRC.