Introducing RTI

There are new changes to the PAYE system due to the introduction of Universal Credits. To ensure you are fully up to date on the changes, read our full overview of RTI and how it will impact you.

Are you ready for the biggest change to the PAYE system since 1944?
Real Time Information (RTI) is being introduced to improve the operation of PAYE. It will make the PAYE system easier for employers and H M Revenue & Customs to operate, and employees will receive information more quickly. It will also help support the introduction of Universal Credits.

Why are HMRC doing this?
One of the key drivers of RTI is to support the introduction of Universal Credits, which will overhaul the state benefits into one payment whilst reducing fraud and ensuring people receive the benefit payments they are entitled to.

Benefits of RTI

  • Over time it will make the PAYE process simpler and less burdensome for employers and HMRC.
  • It will make PAYE more accurate for individuals, over time reducing the number of bills and repayments sent after the end of the tax year.
  • It will enable HMRC to pursue late payments more effectively and will reduce Tax Credits error and fraud.
  • It will also support the payment of Universal Credits.

What does it mean for you?
Instead of sending information once a year at the payroll year end, you will be required to provide information to HMRC for PAYE, NIC and Student Loans every time your employees are paid.

When will RTI impact on your business?
As you employ less than 5000 employees HMRC will require your business to implement RTI from 06 April 2013. HMRC will notify you 4 to 6 weeks prior to you needing to make RTI submissions.

Requirements to become RTI ready
You must ensure that you hold accurate records for every employee. This includes full names, dates of birth, addresses and national insurance numbers. You as an employer must also ensure that your employer record on your payroll software is accurate. You must have present your accounts office reference number, your full company name, full company address and also your tax district and reference number.

What will you submit under RTI?

1. Employers Alignment Submission (EAS): The Employers Alignment Submission (EAS) is a one off submission that you will perform when you begin making RTI submissions. HMRC will use this to match, align and correct the records for your company and employees held on their system. This information will be submitted to HMRC when you have been invited to join RTI.

2. Full Payment Submission (FPS): FPS is the main submission you will make each time you pay your employees. HMRC will use this information to calculate how much PAYE and NIC liability is due from you each month or quarter. Contained in this submission is employee payment information, employee deduction information, hours worked by each employee, how much tax, national insurance and student loans have been deducted from each employee and details of anyone who has commenced and ceased employment with your company. This submission must be made on or before the date your employee is paid.

3. Employer Payment Submission (EPS): HMRC will know from your FPS submissions how much you owe in PAYE, NIC and Student Loans. The EPS is to tell HMRC about adjustments to your liability or when you are informing them of a NIL payment. Contained in these submissions are adjustments for statutory sick pay, maternity pay and paternity pay along with adjustments for CIS tax.

4. National Insurance Verification Request (NVR): An NVR allows you to request a national insurance number for employees you do not hold one for. This submission can also be used to verify an existing employee’s national insurance number.

You can make an NVR submission at any time you need to request or verify an employee’s national insurance number. HMRC will either confirm the national insurance number is correct or provide the national insurance number that should be used.

Treatment of starters and leavers under RTI

Under the new RTI rules the FPS submission will inform HMRC of new starters and leavers. For new starters you should still accept P45s and P46s as normal.

What if you make a mistake?
If for one reason or another a mistake is made while preparing the payroll for a certain month or week you should not resubmit the FPS. You can either correct it in the next pay period or correct it in the current pay period. If you decide to correct it in the current pay period you must not submit a new FPS. Once you submit the next pay periods FPS HMRC will pick up that the year to date figures have changed and the mistake will be rectified.

Changes to the payroll year end under RTI?
Under RTI you now no longer need to submit forms P35 and P14 to HMRC as this information is been provided at the end of each pay period. You do however, still need to complete the end of year declaration questions and give your employees a P60.

If you need any further assistance with your own specific requirements, we are committed to ensuring that you don't pay a penny more in tax than is necessary.

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