Real Time Information (RTI) is a new way of reporting pay and deductions under PAYE. Under RTI you’ll have to send an online report to HMRC each time you pay your employees – that may be more frequently than you currently run the payroll.
Most employers will have to operate RTI from 6 April 2013, unless another date has been agreed with HMRC. In February 2013 HMRC will start to issue ‘invitations’ to employers to join RTI from a specified date. You must start to use RTI from the date directed.
RTI is a computer-driven process. You need to check whether your payroll software will be RTI-ready from April 2013. Don’t assume it will be.
The free HMRC ‘Basic Tools’ payroll software will work under RTI, but only for up to 9 employees. Any complicated pay situations such as net pay arrangements for pension contributions will be beyond its capability.
If you use a payroll bureau, talk to them about the costs under RTI. You’ll have to report more information for each employee, and you may need to run the payroll more frequently, as advances of salary need to be reported when paid. We can help you with your payroll processing.
RTI has two functions – to report employees’ pay and deductions to HMRC, and to report net pay and hours worked to the Department for Work & Pensions, to support claims for Tax Credits and Universal Credit. You’ll need to report the normal weekly hours worked by each employee, split into bands (up to 15.99 hours; 16 to 29.99 hours; 30 hours or more; other).
In addition the following details are needed for every employee: NI Number, surname and forenames, date of birth, gender.
If one or more of those items is missing, don’t enter default numbers, dates or made-up names like ‘Mr Dummy’. As long as the other information is accurate HMRC should be able to trace the person through the system.
Every employee has to be included in an RTI report, even if the worker doesn’t earn enough to pay tax or NI.
This is the biggest change to PAYE since it was introduced in the 1940s, and every employer will have to take care to make the changeover efficiently and without creating problems with HMRC. Please talk to us as soon as possible about how we can help your business meet the RTI challenge. You have just a few months to get ready.