What is Real Time Information (RTI) for Payroll?
The most important update to PAYE has been Real Time Information (RTI). RTI is a new reporting system that aims to make PAYE submissions more efficient. This means you’ll have to send data to HMRC in real time every time you pay employees.
What exactly is Real Time Information?
Real-time information has no impact on how you calculate PAYE; it simply means you’ll have to submit more frequently. RTI was first implemented in 2013.
Rather of submitting PAYE information to HMRC once a year at payroll year end, you’ll have to do so every time you pay your employees.
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Due to concerns about RTI’s impact on small enterprises, reporting requirements were temporarily lowered.
However, beginning of October 2014, the loosened regulations have been lifted, and small enterprises must now disclose every time they pay their employees, not simply once a month.
You’ll still have to handle PAYE the same way, but you’ll have to send HMRC the payroll information on or before the day you pay each of your employees.
P60s should be available.
P9D, P11D, and P11D(b) forms must be submitted.
What happens if I don’t file my tax return with HMRC?
Employers who fail to submit a Full Payment Submission or Employer Payment Summary on time will be penalised by HMRC. They’ll also penalise you if you’re late with your payments.
Is it better to keep everything in-house or outsource?
If you utilise a payroll agency, payroll bureau, or payroll service provider, you should speak with them now about the services they will provide in the future and what you need to do to prepare for auto-enrolment. All providers should be set up to comply with auto-enrolment, but you may need to adjust your systems or the frequency with which you give information to them.
With the change to pensions, now is a good moment to consider whether you should do your payroll in-house or outsource it. Alterledger can advise you on the benefits of each choice and assist you in setting up your own system utilising online software or processing your payroll using the data you submit each month.
If you manage your own payroll system, you’ll need pensions-enabled software to submit your employees’ information to HMRC and your pension provider online every time you make a payment. This can be accomplished in the following ways:
Commercial payroll software, with the option to upgrade your current programme if necessary.
You can hire a payroll service provider, such as a payroll accountants UK or a payroll bureau, to do it for you.
Operating your own payroll system can save you money, but you should consult the HMRC and Pension Regulator website or seek advice from an accountant or other payroll specialist to ensure you are following all applicable requirements.
How do I make use of Real Time Information?
Employers must have internet access and RTI-enabled software in order to participate in RTI. HMRC provides free software to businesses with fewer than ten employees. However, businesses with more than ten employees, and even small businesses, should consider investing in multi-functional, cloud-based software like Xero or QuickBooks.
The RTI data should be precise and current. HMRC may require you to pay the erroneous amount of tax or launch a compliance investigation if your records don’t match or are corrupted.
To avoid any inaccuracies, it is recommended that employee information be double-checked against official documents such as their passport or driver’s licence.
When do I need to submit Real Time Information?
Instead of waiting until the end of the year, the RTI regime compels employers to report at the same time or before each wage payment, depending on the frequency of their payroll.
If an employer makes any mandatory payments during a PAYE month, the employer must submit a Full Payment Submission (FPS) and an Employer’s Payment Summary (EPS).
HMRC utilises these submissions to figure out how much PAYE should be paid.
What is the procedure for submitting information to HMRC?
You’ll need to use a Full Payment Submission for this (FPS). If you use payroll software, it will generate the necessary reports and submit your payroll data to HMRC via the internet.
If you don’t have any employees to pay in a given tax month, you won’t have any FPS to submit to HMRC. By the 19th of the following tax month, you must notify them by sending an Employer Payment Summary (EPS). This will prevent HMRC from sending you a penalty letter because they were expecting an FPS.
There are a few common RTI pitfalls to be aware of
When dealing with RTI, there are two things to keep in mind. They are as follows:
- In-year Full Payment Submission and Employer Payment Summary information were not filed on time.
- Getting the specifics right. Differing parts of pay may necessitate different tax and NI treatment. Attention to detail is crucial when it comes to getting the numbers right. Sick pay, cost reimbursements, and pension payments must all be handled correctly.
If your employees work in different shifts, make sure to account for this in your payroll procedure.
RTI’s Implications for Your Employees
RTI will benefit your staff because it helps to enhance the accuracy of tax codes throughout the year. As a result, fewer individuals of your employees will be required to pay additional tax at the end of the year. Furthermore, any overpayments or underpayments will have a lower value.