Real Time Information (RTI): Guide To What’s New

HMRC is introducing a new way of reporting PAYE (Pay As You Earn) – called Real Time Information, or RTI.

From April 2013 employers and pension providers will report their payroll information to HM Revenue & Customs (HMRC) in a new way.

They will send HMRC information about any payments and deductions they make to employees or pension recipients each time they are made, as part of the payroll process. Payroll software will simply collect the information and send it to HMRC online.  This will replace the requirement to complete an annual return of PAYE tax and national insurance contributions. The vast majority of employers will be making PAYE returns in real time from April 2013, and it will be mandatory for all employers to report in real time from October 2013.

You will no longer be required to submit an end of year return (forms P35 and P14) and the starter and leaver process is simplified. You continue to give your employee a form P45 when they leave but you no longer send forms P45 or P46 to HMRC – instead all starter and leaver information will be submitted as part of the Full Payment Submission (FPS).

• More frequent updating of accurate tax codes.
• Less underpayments and over-payments.
• Reduce tax credit errors and frauds.

• Get payroll software if you don’t already have any.
• Update your existing payroll software to a version with RTI functionality.
• Use a payroll provider such as an accountant or payroll bureau to do the reporting for you.

Each month you will need to submit one or both of the following:

1. Full Payment Submission (FPS) to tell HMRC each time you are due to pay an employee.
2. Employer Payment Summary (EPS) if you don’t have any employees to pay during that period.

These reports will include:

• The amount you pay employees.
• Deductions such as income tax and national insurance contributions.
• Starter and leaver dates if applicable.
• Include details of all employees paid including those who earn below the NIC’s lower earnings limit (LEL).

RTI will support universal credits by providing the department for work and pensions (DWP) with up to date information about claimant’s employment income, enabling them to calculate universal credit payments without the need for claimants to supply employment or pension income information.

Make sure you don’t leave this until the last minute, start preparing now for this change by collecting accurate and complete employee records, update or buy payroll software with RTI functionality or if you haven’t got time for the extra admin RTI may bring get your accountant or a payroll bureau to take care of this for you.