What is RTI and how will it affect me?
Real Time Information (RTI) is the new system introduced by HM Revenue & Customs for the reporting of payroll information which took effect from 6th April 2013.
It effectively requires employers and pension providers to submit detailed information to H M Revenue and Custom every time employees are paid rather than through the year end return. Under RTI, the employer will be required to submit online details of earnings and the tax and NIC deducted, whenever a payment is made to an employee.
Previously those under the earnings threshold were not reported on the payroll. With the introduction of RTI every employee regardless of how much they earn (even if it’s as low as £5) MUST be included in a Full Payment Submission (FPS) on, or before, they are paid.
Payroll software will simply collect the Real Time Information and send it to H M Revenue and Custom online replacing the requirement to complete the existing P35 Employers Annual Return of PAYE tax and national insurance contributions.
What do you need to report?
RTI will also make the monitoring of PAYE easier for H M Revenue and Custom as the information will be up to date and accurate. This will allow H M Revenue and Custom to identify and pursue businesses that have unpaid PAYE during the year, and issue penalties for late payment. There is a structure of penalties and service charges for nonfiling of RTI submissions.
Depending on the frequency of your payroll (whether it is weekly, monthly etc.) you will need to submit either a FPS to tell H M Revenue and Custom each time you are due to pay an employee, or an Employer Payment Summary (EPS) if you don’t have any employees to pay during that period.
These reports will include:
- The amount you pay employees.
- Deductions such as income tax and national insurance contributions.
- Starters and leavers if applicable.
- Details of all employees paid including those who earn below the NIC lower earnings limit (LEL).