Real Time Information (RTI) - What is it and how does it affect you?
8th January, 2014
From the 6th April 2013 HMRC has changed the way all small and medium size businesses report Pay As You Earn (PAYE). The change of reporting does not change the way you calculate PAYE, it just means you are required, by law, to submit more frequent submissions.
RTI represents a shift from the annual reporting of PAYE through the form P35 to a real-time based system, driven in large from the need to implement the Universal Welfare Credits, enabling the government to have up-to-date and accurate information on an individual’s earnings data.
RTI means submissions to HMRC are made on or before the date you pay your employees in a submission called a Full Payment Submission (FPS). The data submitted on the FPS will include an individual’s income tax, the employee and employer’s NIC deductions and student loan payments.
This will then calculate the employers liability expected to be received by HMRC each month and will reconcile to a payment when it is received. These monthly submissions will be used at the end of the tax year by HMRC to calculate employees tax codes and reconcile employer’s liabilities.
As an employer there are a number of considerations to be made to ensure you comply with RTI; first of which is the requirement to ensure you have valid and accurate data on your employees. This will include name records, date of births and national insurance numbers which are used to populate the FPS submission.
Consideration will have to be given to how you upload the RTI data and populate the FPS; if you use a payroll software package you should check that the software is RTI compliant and therefore able to submit returns directly to the Government Gateway portal.
The benefit of the RTI system to the employer seems small; however it does mean there are no longer any requirements to submit the annual P35 ‘Employer Annual Return’ and P14 ‘End of Year Summary’ forms.
It will also mean that employees starting or leaving a new job will not need to send forms P45 (part 3) or P46 to HMRC as this information will be included on the FPS. However, employers are still required to give leaves a form P45 for their records.
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