Real Time Information (RTI) – How it affects you

News

Summary of Changes

Under the existing system of PAYE an employer calculates and deducts tax and national insurance whenever a wage is paid, but does not send details of pay and deductions to the tax office until the end of the tax year. Only upon receipt of this information is it possible for the tax office to check for inaccuracies.

Under RTI details of pay and deductions are sent to the tax office either when or before a wage is paid.

When you will be required to change

You will need to adopt RTI reporting from 6th April 2013 unless you employ over 5,000 employees when you will start sometime between April 2013 and October 2013 as instructed by the tax office.

What you must do before the change-over

  1. Ensure your data is accurate and formatted correctly for RTI. Your information will be checked against that held by the tax office and any discrepancies may lead to rejection of your submission or inaccurate calculations.
  2. Ensure that your software is RTI compliant. If you have 9 or fewer employees then you can use the free HMRC Basic PAYE Tools package available from the HMRC website.
  3. Update your BACS details to include a cross-reference in the submission and Bacs payment instruction.

Types of RTI submissions

  1. Full Payment Submission (FPS). This required each time you make a payment to an employee. It must be made at or before the time of payment and must include all employees including any paid below the Lower Earnings Limit for NICs. The first FPS will include all employees during the current tax year, including starters, leavers, and anyone who has not yet received a payment. The last FPS in the tax year must indicate that this is the case.
  2. Employer Alignment Submission (EAS). This is only required if you have more than 250 employees, you have more than one payroll provider or payroll system, or unable to make a single FPS due to file size. The EAS is used to align your employee records with HMRC’s.
  3. Employer Payment Summary (EPS). This is used for any pay period when there are no payments made to any employees, and also where the total tax and national insurance payable to the tax office for that pay period differs for any reason from the total tax and national insurance shown by the FPS.
  4. National Insurance Number Verification Request. This is used to verify or trace an employees NIC number.
  5. Earlier Year Update. This is used to notify any changes to the payroll made after the final FPS has been submitted