Real Time Information

What is RTI?

Real Time Information (RTI) is the biggest change to PAYE since its inception in 1944 and affects all employers who operate a UK payroll.  RTI was introduced to provide HMRC with more accurate and up to date information on employees so they can improve the tax system and help manage benefit payments more effectively.

What you need to do

From 6 April 2013 employers started reporting PAYE information to HMRC in real time.

This means that you (the employer) or you accountant, bookkepper or payroll bureau has to:

  • Send details to HMRC every time you pay an employee, on or before the day you pay your employees
  • Send a Full Payment Submission (FPS) to report data to HMRC
  • Use payroll software to send this information electronically as part of the routine payroll process
  • The list of information required from HMRC is extensive and includes details of employees’ addresses, dates of birth, pay, Tax, National Insurance …. the list goes on.  In total there are over 100 values which may need to be submitted per employee.
  • You no longer submit end-of-year forms P35 and P14.
  • You continue to give your employee a form P45 (employee parts) when they leave but you no longer send forms P45 (part 1) or P46 to HMRC. Instead you must report all starter and leaver information via your payroll software each time you pay someone
  • You must ensure that the information you hold regarding your employees is accurate and complete.

For more information visit http://www.hmrc.gov.uk/rti/employerfaqs.htm

Late Filing Penalties – A Very Real Risk for any Employer for a number of reasons

Punitive, late filing penalties will start apply from 6th October 2014.  These were due to start in April 14, but due to the large number of employer and HMRC errors/issues the penalty regime was delayed until October 2014.

The high risk and cost of automated late filing penalties alone is a major factor in considering outsoucing your payroll.

To avoid late filing penalties for 2014/2015, you must make sure all submissions due are fully up to date by 5 October 2014.

Where payment information is not received as expected on an FPS, or you haven’t told HMRC that no employees have been paid in a tax period by sending an EPS, late filing penalties will apply.

New, automated in-year late payment penalties will start from April 2015.

In the meantime, HMRC will continue to charge late payment penalties – on a risk-assessed basis – on payments due from employers for the tax year 2014-15 onwards.

Penalty charges for late returns and how they apply

In addition to where submissions do not appear to have been filed by the due date, a late filing penalty for a month may be issued where one of the following applies:

  • payment information is not received as expected on an FPS
  • you haven’t told HMRC that no employees have been paid by sending an EPS

However, no penalty will arise for the first month in each tax year where there is a filing default.

The size of the late filing penalties depends on the number of employees within the PAYE scheme.

1 – 9 Employees – £100 per monthly late filing

10 – 49 Employees – £200 per monthly late filing

50 – 249 Employees – £300 per monthly late filing

250 or more Employees – £400 per monthly late filing

HMRC will use the latest information available to determine the number of employees, and the size of the filing penalty for each period where a return is late.

Top Tips

  • Consider minimising the risk of penalties by outsourcing – take the pressure off your company, so you can focus on making money at what you are good at
  • If you do payroll inhouse, ensure your staff understand these penalties are real and automated from April 2015
  • Ensure you have holiday/sickness cover in place to run your payroll – FPS and EPS’s must be done on time or else…..
  • Still running weekly payrolls?  Consider moving to a monthly payroll.  You will save time and money, and you will of course reduce the number of HMRC submissions due in the year.
  • Don’t leave returns to the last minute – they are sent over the internet, and we have all experienced broadband issues in the past, so make sure you file as early as possible.

How we can help

As a payroll bureau we submit data to HMRC on behalf of our clients and RTI will be part of our service, you can ensure that your company complies fully with the new HMRC Real Time Information regulations by engaging AFM Solutions to process your payroll for you.

Please feel free to contact us for a no obligation chat about RTI and payroll processing – it is certainly easier for you to outsource; you’ll save a lot of time and hassle, and it will most likely work out cheaper than processing your own payroll taken everything else into account.