Payroll Focus – Real Time Information
RTI is a compulsory process that is being introduced by HM Revenue & Customs to impact on all employers and is the biggest change to the Pay As You Earn system since it began in 1943.
So what does this mean for you the employer? You will be legally obliged to report PAYE in real time. This means you’ll have to send details to HMRC about gross monthly pay and deductions such as income tax, National Insurance contributions, pension contributions and student loan repayments each time you pay your employees.
The key thing with RTI is to make sure that all the employees’ data is correct as this information is essential for the weekly and/or monthly submissions that form part of the new regulations.
To make sure you’re ready, these are my top tips for getting your payroll ready for RTI.
1. Check your employee data. All information you submit will be compared with HMRC’s National Insurance and PAYE Service (NPS) records. 80% of data quality problems can be traced to employers’ records, and if there’s a mismatch you could end up making expensive mistakes with duplicate records, incorrect tax calculations or face compliance checks with HMRC – so check your data.
2. Clean your data using official documentation. If possible, check your employee information against reliable and approved sources such as passports, birth certificates and documents from HMRC or the Department of Work and Pensions.
3. Check your company details. A simple thing, but one that can catch you out. Make sure HMRC has the right details for your company, including its official name, Tax District and PAYE Reference, and its Account Office Reference.
4. Make sure you have RTI-ready software. All the major accounting software providers have released RTI-ready versions of software. Check yours is up to date.
5. Make your Employer Alignment Submission (EAS) if needed. If you have 250 employees or more, or your PAYE system is administered by two or more systems or providers, you will need to submit an EAS. Otherwise, you will be invited to align your payroll the first time you send a Full Payment Submission (FPS).
6. Keep employee details up to date. With RTI, all new starters are reported via the payroll rather than separately. Add any new starters immediately, and particularly make sure you add casual and infrequent employees to your payroll.
7. Month-end check. Each time you make a payment, you will need to submit a Full Payment Submission (FPS). However, each month you need to check whether you also need to submit an Employer Payment Summary (EPS). Because the FPS only contains information about specific employees, you need to send an EPS to show how much you are able to recover in respect of statutory payments, any deductions you are entitled to make under the NICs holiday scheme or any CIS deductions.
RTI will mean major changes, particularly for smaller businesses. If you have any concerns or questions, be sure to let us know and we’ll do all we can to get your payroll running smoothly before the April deadline, or for more information contact us at our payroll bureau on: