Real Time Information – The Biggest Change in 70 years.
In April 2013 HMRC introduced a new way of reporting PAYE called Real Time Information (RTI). The move to real time reporting is widely recognised as the biggest change to the PAYE system since its introduction nearly 70 years ago.
RTI is being introduced to improve the operation of PAYE, making it easier for you, the employer, to operate PAYE, employees will receive information more quickly and it will help support the introduction of Universal Credits.
What is RTI?
Real Time Information means that employers and pension providers will tell HMRC about PAYE payments at the time they are made as part of their payroll process instead of at the end of the year. Accredited payroll software will collect the necessary information and send it to HMRC online. One of the reasons for introducing RTI is to support the introduction of the Government’s Universal Credits in 2013.Universal Credits will streamline the State Benefits System into one payment – reducing fraud and simplifying benefit processing.
What will RTI change?
Under RTI, employers and pension providers will tell HMRC about PAYE, NIC and student loans every time they pay an employee, rather than once a year through the employer’s annual return.RTI will make the PAYE process less complicated by removing the need to submit end of year P35s and P14s, and will simplify the new starter and leaver processes.
What will RTI not change?
The way in which tax and NIC deductions are calculated is not changing under RTI. Payment dates will remain the same too, and at the end of the tax year employees will continue to receive a P60.
What does RTI require?
Accurate employee information will be crucial. For RTI to work successfully the information exchanged between employers and HMRC needs to be as clean as possible.Cox & Co. always maintains accurate employee records for its clients – so this should not pose a problem for you or us.
What will RTI improve?
- It will make the PAYE process simpler for employers and HMRC.
- It will make PAYE more accurate for individuals, reducing the number of tax demands and repayments sent after the end of the tax year
- It will enable HMRC to pursue late payments more effectively
- It supports the payment of Universal Credits
- It will reduce Tax Credits error and fraud
What should I do now?
As a client of ours – nothing! Most employers will be legally required to use RTI from April 2013. HMRC will tell you and us when your business is required to do this.Cox & Co. will ensure that your employee data is clean and at the specified date will carry out the HMRC Employer Alignment Submission (EAS).
Thereafter, every time your payroll is processed by us we will carry out the Full Payment Submission (FPS) and Employer Payment Summary (EPS) as required.
Everything else will stay the same. You will be informed by us what to pay your employees and the HMRC as normal.
I still feel concerned, can you help further?
As your payroll provider we will ensure that your organisation is ready for RTI and abides by the new regulations and avoids penalties.But if you have any worries,
please do give us a call on 0117 9323444
Written by Tracy Jerram