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Real Time Information (RTI): the basics

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Real Time Information (RTI) is the most significant change ever made to PAYE. An improved way of reporting, RTI is designed to make PAYE submissions more efficient – meaning you’ll need to submit information to HMRC in real time, every time you pay employees.

What is Real Time Information?

Real Time Information doesn’t change the way you calculate PAYE; it just means you’ll need to make more regular submissions. RTI was introduced in 2013.

Each time you pay your employees, you’ll need to submit PAYE information to HMRC, rather than just once a year at payroll year end.

Following concerns over the impact of RTI on small businesses, rules of reporting were temporarily relaxed.

But from October 2014 those relaxed rules were lifted and small businesses need to start reporting each time they pay their employees – not just on a monthly basis.

You’ll still need to process PAYE in the same way but you’ll need to submit the payroll information to HMRC on or before the day you pay each of your employees.

Paying the nation

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You have to…

  • Provide P60s
  • Submit P9D, P11D & P11D(b) forms

How do I submit information to HMRC?

You’ll need to do this using a Full Payment Submission (FPS). If you have payroll software it will generate the required reports and submit your payroll information online to HMRC.

If you don’t need to pay any employees in a particular tax month, you’ll have no FPS to send to HMRC. You must notify them by sending an Employer Payment Summary (EPS) by the 19th of the following tax month. This will make sure HMRC don’t wrongly send a penalty notice because they were expecting an FPS from you.

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What happens if I don’t submit to HMRC?

HMRC will penalise any employer not submitting a Full Payment Submission or Employer Payment Summary on time. They’ll also penalise you if your payments are late.

Outsourcing

If you’re outsourcing your payroll be mindful that submitting RTI is still your responsibility. Ask your provider how they’re complying with RTI and if it means any changes for your business.

Managing in-house

Ask your payroll software provider if they’re RTI-ready. It’s essential you make sure you’re using software that’s legally compliant with the support you need to submit PAYE in real time.

Common RTI pitfalls to be aware of

There are two areas you need to consider when dealing with RTI. They are:

  • The late filing of in-year Full Payment Submission and Employer Payment Summary details.
  • Getting the details correct. Different elements of pay might need different tax and National Insurance treatments. When it comes to getting the calculations right, attention to detail is key. The likes of sick pay, expenses and pension payments need to be dealt with in the correct way.

If your employees have different working patterns, make sure you reflect them in your payroll processing.

What RTI means for your employees

Your employees will benefit from RTI as it helps to improve the accuracy of tax codes during the year. This results in fewer members of your staff having to pay additional tax when you get to the end of the year. In addition, any overpayments or underpayments will be smaller in value.

Editor’s note: This article was published in August 2017 and has been updated for relevance.

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