Real Time Information (RTI) is the new system being introduced in April 2013 by HM Revenue & Customs for the reporting of payroll information, which will effectively require employers and pension providers to provide detailed information to HMRC every time employees are paid rather than through the year end return.
The implementation of RTI will become mandatory without exception between April 2013 and October 2013.
Under RTI you will not be able to process any pay for new employees that fail the validation procedure with HMRC, it is therefore extremely important that the information provided is accurate. Employers will be required to file the full pay, tax and national insurance information of their employees to HMRC before the employees have been paid.
If you haven’t already done so, you will shortly receive from HMRC an Employer Alignment Submission (EAS) or a first Full Payment Submission (FPS), this is the first step to joining RTI and will allow HMRC to update their database with the details from this submission. This submission will need to include starters and leavers in the year, not just those under current employment.
You must submit a Full Payment Submission (FPS) each time you make a payment to an employee. The final FPS for an employee should be sent on or before their last pay day in the tax year and will be used to update individuals’ tax, contributions and student loan deduction records.
If you do not pay any employees in a tax month, and therefore have no FPS to send to HMRC, you must send an Employer Payment Summary (EPS) by the 19th of the following tax month. This will help HMRC avoid incorrectly issuing you with a penalty because they were expecting an FPS from you.
RTI will also make the monitoring of PAYE much easier for HMRC as the information will be up to date and accurate. This will allow HMRC to promptly identify and pursue those businesses that have unpaid PAYE during the year, avoid recalculations at the end of the tax year and permit HMRC to issue penalties for late payment as soon as the employer becomes liable for one.
For guidance on the implementation of RTI, or for more information about our payroll service please contact Leon Smith on 0161 832 4451.