By now you would surely have heard about Real Time Information (RTI), the completely new system of reporting PAYE to HMRC. Starting from April 2013, under RTI, employers will submit information about PAYE payments to HMRC online throughout the year, rather than at the end of the year. Every time you process your payroll, your software will collect the necessary information and send it to HMRC online on or before each actual pay day. All required information must be complete, accurate and up to date.
The concept is to:
- make the PAYE process simpler and less burdensome for employers and HMRC
- simplify the employee starting and leaving processes
- make PAYE more accurate for employees, eventually reducing the number of bills and repayments sent after the end of the tax year
- enable HMRC to pursue late payments more effectively
- support the payment of Universal Credits
- reduce Tax Credits errors and frauds
Before going live using RTI all PAYE schemes must undergo employer alignment. Employers will receive details from HMRC about the date they need to submit their Employer Alignment Submission (EAS) which checks the payroll software details match the details held by HMRC.
Once your EAS has been successful, you can submit your first Full Payment Submission (FPS) over the internet via the Government Gateway or the Electronic Data Interchange (EDI). The first FPS must include all employees who have been employed during the current tax year. Subsequent FPSs will only contain pay and deduction details for those employees paid on that pay day.
An Employer Payment Summary (EPS) can be sent if no payments are made to any employees in a tax month or if you need to recover any statutory payments or CIS deductions suffered. If you want the deduction to apply to a specific tax month, you will need to send the EPS by the 19th of the following month.
We recommend that you start to prepare for RTI by checking the information you hold for your employees: Full name, correctly spelled and in the correct order/correct NI number/ correct date of birth/exact start dates and leave dates. You will also have to submit each employees hours worked.