Reporting Total Hours Worked to HMRC, Scrapped!

Intro

A major change to payroll reporting that was set to take effect in 2026 has now been scrapped. HMRC had proposed a requirement for employers to report employee working hours in each Real Time Information (RTI) submission. However, the government has now confirmed that this plan will not go ahead.

What was originally proposed?

HMRC had been exploring ways to collect more detailed data on employee working hours to ensure accurate tax and National Insurance contributions. The proposal would have required employers to report:

• Total hours worked for hourly paid employees.
• Contracted hours for salaried employees.
• A 'nil' return for payments not linked to hours worked (e.g., taxable benefits or termination payments).

Originally planned for April 2026, the change was expected to impact payroll reporting processes across businesses of all sizes.

Why has the plan been dropped?

Following consultation with employers and payroll providers, concerns were raised about the administrative burden of tracking and reporting hours worked each pay period. Businesses highlighted challenges in adjusting payroll systems and ensuring data accuracy. In response, the government has now decided not to proceed with the requirement.

What does this mean for employers?

For now, payroll reporting will remain unchanged, and businesses will not need to track and submit hours worked in FPS submissions. However, HMRC continues to explore ways to improve tax reporting processes, so further proposals could emerge in the future.

While no immediate action is required, employers should stay informed about any future changes to payroll reporting requirements.