Small firms have been given an extension to the date when they must comply with HMRC’s ‘Real Time Information’ (RTI) initiative.

The Revenue announced that firms with fewer than 49 staff will be exempt from RTI late filing penalties until March 2015.

The RTI initiative requires employers to provide information about tax and National Insurance deductions every time they pay an employee, rather than annually.

The original deadline was October this year.

HMRC has made a number of relaxations to the rules since roll out began in October 2013, probably because the changes represent the biggest overhaul of payroll taxes in 70 years.

Ruth Owen, director-general for personal tax for HMRC, said:

“We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it’s best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed.

“We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.”

Employers with 50 or more staff will start receiving fines if they file PAYE returns late after October 6.