Reporting Total Hours Worked to HMRC

Intro

Big changes are coming to the way we report income tax and National Insurance contributions in the UK. From 2026, HMRC (Her Majesty's Revenue and Customs) will require employers to report the total hours worked by their employees. In this article, we'll break down what this means for you and how you can prepare.

What's behind the change?

Right now, employers need to provide some basic information about employees' working hours in each RTI return. But HMRC wants more detail to make sure everyone's paying the right amount of tax and National Insurance. After consulting with employers, HMRC has decided to ask for more information on contractual hours worked and actual hours worked for hourly rate employees.

The new rules were being finalized, but have now been delayed until April 2026, meaning we may expect them to apply from the 2026/27 tax year and beyond.

What do employers need to report?

From 6 April 2026, employers will need to report the total number of hours worked by each employee in respect of payments reported in the relevant RTI return. Here's how it'll work:

• If an employee is paid by the hour, you'll report the number of hours they worked to earn their payment.
• If an employee has a contract that specifies a certain number of hours, you'll report those hours.
• If the payment doesn't fit into one of these categories, you'll report the hours as 'nil' and add a brief description of the payment (e.g., taxable social security benefits, payrolled benefits, or termination payments).

If an employee's pay is calculated in more than one way, you'll add up the hours for each part of their pay.

What should employers do now?

It's time to start thinking about how these changes will affect your payroll and HR systems. You might need to update your processes for gathering, validating, and reporting hours worked. Consider what steps you'll need to take and what resources you'll need to make it happen.

Some employers might need to adjust their internal systems to hold the right information or create new interfaces to access the data easily. And remember, accurate reporting is crucial to avoid any issues with National Minimum Wage enforcement.

By understanding what's required and preparing ahead of time, we can ensure we're compliant and our employees are paying the right amount of tax and National Insurance. Let's get ready to make this change a success!