Last year HMRC brought out a major change to the way payroll information was to be submitted to them. Employers would no longer be required to submit P35s at the end of each payroll year, as the information would now be submitted each payroll period and be called RTI – Real Time Information. This change is meant to help with the Universal Credit when it is fully implemented, as it provides HMRC with an exact picture of what an employee is earning. I get a lot of different newsletters from various associations and companies, and the best explanation I have come across for RTI is on the Sage One Blog. The article was written on January 24, 2013, but it gives a very comprehensive explanation on RTI and everything that is required. Now some of this information may have changed slightly since the article was first written, but it’s still a very good article.
The article starts out with a definition of RTI and why it’s been created:
“Real Time Information (or RTI for short) is an HMRC initiative to improve the accuracy of PAYE, reducing the need to send out corrections for overpayment or underpaying and the possibility of fraud. Under new RTI legislation, employers will be required to submit information electronically via the internet to HMRC on or before they pay their employees instead of just once a year.”
The article goes on to explain what it means for each business and what needs to be submitted under RTI. It contains very good descriptions of the four different types of submissions that an employer is responsible for making:
- Employers Alignment Submission (EAS)
- Full Payment Submission (FPS)
- Employers Payment Summary (EPS)
- National Insurance Number Verification Request (NVR)
Further into the article it talks about how a business can prepare for RTI compliance:
“The key to successful implementation and compliance of RTI is simple‚ don’t leave it to the last minute! Familiarise yourself with RTI by reading all the great information and guides on the www.sage.co.uk/rti website and don’t be afraid to ask your payroll provider how they are going to help ensure your compliance with RTI. Invest some time in carrying out an audit of your employee and payroll data to ensure its accurate and up-to-date, as incorrect information such as Name, Date of Birth, National Insurance Number and Gender are used to match your records against the records HMRC store.”
The article continues through various questions that all employers were asking after HMRC made their announcement:
- What happens if you don’t comply
- How the way you do payroll has changed
- The different steps of processing payroll – taking on new employees, dealing with the forms when an employee leaves when employees are paid irregularly
- How you pay HMRC outstanding PAYE and NI
- The payroll year-end
If you are using Sage One, the article also explains how it can help you to be ready for RTI.
To read the full article, go to the Sage One Blog. The article was written by Paul Lancaster on January 24, 2013.