The original proposal, put forward by the Conservative government in July 2022, would have introduced a mandatory reporting requirement for exact employee working hours and detailed information on dividends paid to directors, effective from 6 April 2025.
HMRC had previously acknowledged the challenges of collecting such comprehensive data, noting that not all employees work at a single company site, potentially limiting the granularity of information available.
Draft legislation for these rule changes was issued in March of this year, with four statutory instruments open for a six-week consultation period.
The previous government estimated that the new employee hours reporting requirement would incur transitional costs of up to £58 million for businesses, with ongoing annual compliance costs of £10 million. Additionally, HMRC projected implementation costs of up to £6 million for changes to the PAYE RTI system.
Notably, the delay extends beyond just the employee hours reporting rules. The government is also reconsidering whether to proceed with reporting changes that would have required businesses and individuals to provide data on self-employment start and end dates, as well as dividends paid to company owner-managers.
The Conservative government initially claimed that these measures would provide HMRC with insights into self-employed individuals, partnerships, and dividend earners, as well as employee working hours, job titles, and business locations. The Treasury argued that this data would enhance workforce planning and improve taxpayer compliance.
However, responses to the original consultation highlighted employer concerns about the complexity, cost, and administrative burden of the proposed reporting requirements, including necessary software upgrades.
HMRC has acknowledged that the scope of the proposals could potentially infringe on "the rights and freedoms of individuals."
The government has now established a timeline for concluding the review of these proposed changes."
