RTI or Real Time Information was introduced in April 2013. Under RTI, employers now need to send information to HMRC every time they pay their employees, rather than waiting until the end of the year.
There are two types of submissions that you’ll need to make: a Full Payment Submission (FPS) and an Employer Payment Summary (EPS).
Full Payment Submission
The main and most common submission type consisting of the employee payments and deductions that will be required each time an employer makes a payment to an employee.
You will need to submit an FPS every time you make a payment to an employee. The submission must be made on or before the date the employee is paid.
HMRC will use this submission to calculate how much PAYE and National Insurance contributions (NIC) liability is due from you each tax month.
Employer Payment Summary
This is only submitted where you need to advise HMRC of any alteration to this liability (such as where reclaiming statutory payments) or where you are informing them of a nil payment.
You should make this submission when or before the relevant monthly or quarterly liability payment is made to HMRC.
What you need to comply with RTI
Outsourcing your payroll to an accountant or payroll service provider? You should ask them what they are going to do to help ensure your business is RTI compliant.
If you use payroll software, you should check with your software provider to understand how they are going to help you become RTI compliant.
If you are using desktop software, it’s likely you will be provided with a software update that you will need to install.
However, if your business is using cloud-based payroll software, your provider should be seamlessly and automatically enabling the software to make RTI returns.
Why the quality of your payroll data is critical for RTI
Invest some time in carrying out an audit of your employees’ payroll data to ensure it’s accurate and up to date.
Under RTI, the information you submit to HMRC every time you pay your employees is matched against records it stores.
If the records you submit don’t match, you may trigger creating duplicate or inaccurate records which may result in incorrect tax calculations or HMRC compliance checks.
Make sure you have the correct details for your employees, wherever possible check the information you need against an official document such as:
- HMRC and/or Department for Work and Pensions documentation
- Passport documentation
- Birth certificate
Fines and penalties
HMRC will penalise you if you are not submitting your FPS on time, you didn’t send the expected number of FPSs or you failed to send an EPS when you didn’t pay any employees in a tax month.
What your business will pay in penalties will depend on the size of your business (in terms of employee numbers):
- 1 to 9 employees: £100
- 10 to 49 employees: £200
- 50 to 249 employees: £300
- 250 or more employees: £400
RTI and casual, seasonal and temporary employees
If you have casual, seasonal and temporary staff, you have to include them as an employee in your payroll and submit information to HMRC every time an employee is paid.
Taking on a new casual, seasonal and temporary member of staff and need to let HMRC know? Treat them exactly as you would a full-time employee, accepting the P45 the employee brings from a previous employment. If they don’t have a P45, they will have to fill in a starter checklist (which replaced the P46).
If the employee leaves the business, you need to ensure they have received their last payment and have been marked as a leaver. The leaver information will be included on their final FPS, which will inform HMRC they are no longer working for the business.
Make sure you provide the employee with a paper copy of their P45 so they can take it to their next job.
