Real time information and PAYE
RTI is a new way of reporting PAYE information. It will enable employers and pension providers to tell HMRC about payments to employees/pensioners as they are made rather than at the end of the tax year. Over time, this will allow HMRC to collect the right amount of tax and NICs from more individuals in-year. RTI will also support universal credits.
What is the timetable for introducing RTI?
Most employers and pension providers will join RTI from April 2013, with all employers and pension providers reporting RTI by October 2013.
How will RTI work in practice?
RTI reporting will be embedded into normal payroll activity. A wide range of payroll software is available, including some free products. HMRC’s free software, Basic PAYE Tools, is also available for employers with nine or fewer employees. More information about the range of payroll software is available or speak to your payroll provider.
What is changing?
Employers and pension providers will no longer have to:
- send an end of year return (P35, P14s and P38As) to HMRC;
- send a form P45 to HMRC when an employee leaves; or a pensioner dies/ leaves the pension scheme;
- send a form P46 to HMRC when an employee/pensioner joins.
What is staying the same?
- the way tax and NICs are calculated;
- the need to give employees/pensioners P60s;
- the dates of payments to HMRC of PAYE income tax and NICs;
- if required, the need to report expenses and benefits on a form P11D and pay class 1A NICs using form P11D(b);
- the need to provide leavers with a P45;
- the need to obtain starter information.
How will RTI benefit employers and pension providers?
RTI will remove admin burdens of £300m a year from employers/pension providers, mainly by removing the end of year return process. Embedded processes will also mean better data quality resulting in more accurate tax and NICs payments and fewer queries from employees or pensioners.
How will RTI be introduced?
RTI will be introduced progressively to allow time for testing the new processes. We began piloting RTI in April with ten volunteer employers. A further 300 employers/pension providers will join the pilot in May and June and up to 1300 employers/pension providers will be reporting RTI by the end of September. What’s more, by March 2013 we aim to have brought in up to 250,000 employers/pension providers.
Improving data quality: what needs to be done and when?
Data quality is key to the successful introduction of RTI. Employers and pension providers should check the accuracy of their employee/pensioner data. This involves making sure that surname, forename, gender, address, date of birth and National Insurance number (NINO) are correct and in the right format for RTI purposes. Employers should also make sure that they add staff to their payrolls who will now need to be included with their RTI submissions, for example, those under the lower earnings limit (LEL).
How can agents help their clients to prepare for RTI?
Tax professionals can assist their clients by:
- talking to their clients about what RTI will mean for them;
- making sure the client’s payroll staff know about RTI and what this means for their business;
- reviewing their HR, finance, reward and payroll processes, including information-flow and their business resources, to ensure that they will be able to make their RTI submissions on time whether weekly or monthly;
- where clients operate their own payroll, ensuring they talk to their payroll software provider and if they pay by Bacs, either their Bacs Approved Solution Supplier (BASS provider) or their Bacs Approved Bureau.
HMRC is committed to a transition to RTI that is smooth and on time. We will continue to work closely with all involved in the operation of PAYE to achieve this. For further information about RTI, click here.
Jane Brothwood – head of RTI communications, HMRC