Real Time Information: Everything you need to know
Launched in April 2013, and made obligatory six months later, Real Time Information (RTI) represents the biggest shake-up of the UK’s payroll system since PAYE was introduced seven decades ago. Any organisation which runs a PAYE scheme is affected – or nearly 1.5 million small businesses UK-wide.
RTI means employers must submit records to HMRC electronically every time they complete a payroll run, or each time staff are paid, rather than at the end of each accounting year, as was the case previously. It includes sending HMRC information on PAYE, National Insurance Contributions and student loans; temporary and casual employees are covered, as well as those paid below the National Insurance Lower Earnings Limit, and monthly and weekly paid staff.
RTI aims to increase the accuracy of PAYE, and reduce the potential for fraud. However, since the launch, thousands of businesses have struggled to achieve compliance – some may still not even realise the full extent of their obligations under RTI, or that it is a legal requirement.
The most common submission type is Full Payment Submission (FPS), consisting of the employee payments and deductions needed every time someone is paid. HMRC uses this to work out National Insurance and PAYE due each tax month.
Where you need to advise HMRC of any changes to PAYE and National Insurance liability, for instance if you are recovering Statutory Sick or Maternity Pay, or if no payment has been made, you are obliged to submit an Employer’s Payment Summary (EPSP). (Because casual workers are included in RTI, you need to make a submission whether or not someone has been paid.)
When staff start working for you, or leave your employment, HMRC no longer needs a P45/P46, although you should still use paper copies for your own records. All leavers and starters are included on the Full Payment Submission under RTI.
There are penalties for organisations which report their payroll information late. Already, employers with at least 50 staff members on the payroll are being penalised, while, from March 2015, those with fewer than 50 employees can be fined, with monthly levies running into hundreds of pounds.
You can be punished if your Full Payment Submission (FPS) arrived late, or if you failed to send the expected number of these submissions. You can also be fined if you did not send an Employment Payment Summary (EPS) when it was needed.
At FourM, our tax planning specialists and accounting team draw on extensive expertise and knowledge, and have access to the latest software and other technology, making RTI compliance really straightforward. This leaves you to focus on what you do best – running your business. Find out more from us today.