Real Time Information (RTI) is the new way of reporting your payroll information to HMRC.
Under the new RTI payroll system employers will send information about the tax and national insurance that they deduct from employees' wages to HMRC at the time when they are deducted - rather than at the end of the tax year in April-May, as happens now (via the P35 and P14).
So instead of submitting this data once a year to HMRC, online submissions will be made weekly, fortnightly, four weekly or monthly, depending on the frequency at which their employees are paid.
The fundamentals of PAYE remain unchanged, for example, use of codes and deducting tax and National Insurance. What RTI does change is how and when employers and pension providers report information to HMRC.
If you run payroll then yes, you'll be affected by RTI!
All small and medium sized employers will be expected to start using RTI to submit payroll data from April 2013, unless they have agreed a different start date with the Tax Office. Once you receive an 'invitation' from the Taxman to use RTI, you must join the RTI system from the date directed.
If you're an employer, each time you pay an employee you submit:
You need to include the details of all employees you pay, including those who earn below the NICs Lower Earnings Limit (LEL).
You no longer submit an end of year return (forms P35 and P14) and the starter and leaver process is simplified. You continue to give your employee a form P45 when they leave but you no longer send forms P45 or P46 to HMRC - instead you must submit all starter and leaver information as part of the Full Payment Submission (FPS).
You will need to collect some new data items under RTI which are not currently required for PAYE, such as:
- Hours worked per week for each employee based on one of four bands;
- Details of those earning less than the lower earnings limit (£107 per week);
- Which employees are paid irregularly, perhaps only once per year; and
- Passport numbers for employees who do not have NI numbers.
In addition you will need to have the correct NI number (where this exists), date of birth, gender, full name and address for each employee.
Don't panic! If we run your payroll for you then we'll sort all of this out and do all of the submissions for you!
If you're a client then over the next few months we'll be contacting you to make sure that all of your payroll information is ready and to let you know if we're missing any information.