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PAYE: RTI update
Date: 24th May 2013
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PAYE Real Time Information (RTI) is now with us but, if you are still a little unclear about it, here's a reminder.
From 6th April 2013, employers had to start reporting PAYE information to HMRC in real time. You may see this referred to as Real Time Information - or RTI. This means that you as employers, or via your accountants, bookkeepers or payroll providers, have to send details of all payments to employees electronically using payroll software to HMRC on or before the day that you pay them.
You will use a Full Payment Submission (FPS) to do this. Your payroll software will generate the new reports that you need, including details such as amount paid, deductions such as Income Tax and NICs, and starter and leaver dates if these are applicable. You need to include all of the employees that you pay, even those who earn below the NICs Lower Earnings Limit.
If you run your own payroll system, you need payroll software that is ready for RTI in order to send your PAYE information to HMRC online, every time you pay an employee. You can do this in one of three ways – using commercial payroll software, using a payroll service provider, such as an accountant or a payroll bureau, who will do it for you, or, if you employ nine or fewer people, you can use one of the free payroll software packages or HMRC’s free Basic PAYE Tool.
You also need to make sure that you are registered for PAYE Online, and that you have accurate and current information about all of your employees, verified against their birth certificate, passport or other HMRC-approved document.
The good news!
As an aside, the good news is that this change to FPS will make a lot of your reporting more straightforward and streamlined – no P14 or P35 will be needed at the Tax year end (your 2012-13 P35 Return will have been the last one), no P45s sent to HMRC but only to be used for employees’ own records, no P46, P46(Pen) or P46(Expat), no CA6855 and no P38(S).
And note that many aspects of HMRC dealings will remain the same. PAYE indeed remains the same; it is only the reporting of it that changes. Coding notices, payment dates, reporting a change to HMRC, P60s, the reporting of expenses and benefits, and the CIS process will not change.
If you are still struggling to get to grips with RTI then please let us know asap. For the moment, HMRC are adopting a “light touch” approach to employers who are not yet operating RTI correctly but, needless to say, this will not last for long!!