Since April 2013 PAYE information has had to be reported in real time: Real Time Information or RTI.
This was a major change to the PAYE system. Previously PAYE details were reported at the end of the tax year on line via P14s and the form P35.
Since April 2013, every time a payroll is processed the details need to be reported on line at the time of processing. It is now part of the routine payroll process. This in effect means payrolls have to be operated using electronic payroll software. It also means all details –names, National Insurance numbers, etc. must be correct.
Leavers and new employee information will be submitted in real time via the electronic software you operate.
HMRC operated pilots for RTI last year and Bates Weston took part in one of those pilot schems. RTI was orginally to be phased in by HMRC from April 2013 and by October 2013 all payrolls were to be reporting under RTI. There have been some amaends to the timetable but employers will be notified when they must report under RTI.
Why is RTI being introduced?
HMRC advise that it will improve the operation of PAYE for employers, HMRC and employees. It will also provide accurate records on wages and tax for the forthcoming Universal Credit so correct benefits will be paid.
What are the implications of RTI?
The main implications are listed below, but in essence employers must ensure that they have the facilities to report information digitally, that their employee details are correct at the time their payroll is set up and that tax and NIC payments to HMRC are made on time and in full as RTI aims to ensure HMRC is fully aware of the exact amounts due.
After March 2013:
- Manual payroll will no longer be an option. Payroll information must be reported through the Government gateway on the internet or through Electronic Data Interchange (EDI) software such as Sage.
- Each time the payroll is run, a Full Payment Submission (FPS) detailing the PAYE and NIC calculations for each employee/pension recipient will be required.
- If no relevant payments are made to an employee/pension recipient during a tax period, the employer will still need to notify HMRC using an approved electronic method.
- Employers will receive notification 17 days after the end of the tax period if HMRC is not in receipt of the FPS. Late submissions may incur penalties, as defined by HMRC. Details can be found at www.hmrc.gov.uk/news/payerti-payments.
- Year end P60's will still be issued to employees.
- P45's will still be available to employees from their records but the information will not be submitted to HMRC.
- Mandatory employee information required for a submission to be accepted includes: surname, forename, date of birth, gender and address. If the employer's records do not match HMRC's records, the tax payer will have to notify HMRC to change their records. HMRC will not accept notification of change from an employer.
Clearly, for employers who undertake their own payroll this is a significant change carrying additional administrative burdens. For those employers who choose to use a payroll bureau, such as our own, the payroll bureau will take on these tasks.
If you would like to speak to us about our payroll service, please do call our payroll team on 01332 365855, email firstname.lastname@example.org