What is RTI?
RTI,or Real Time Information, is a new system that HMRC are introducing to improve the operation of Pay as you Earn (PAYE). This new legislation is being introduced by HMRC from 6 April 2013.
So as this new legislation is fast approaching it’s important to start preparing your business now.
The employer will need to send details to HMRC every time they pay an employee, on or before the date of payment. When the employee’s PAYE data is submitted each payday, it will be checked against the PAYE data that HMRC holds on that employee.
Under RTI you will still continue to deduct tax and national insurance as you do today. You will also continue to make the payment of any outstanding PAYE & NIC liability to HMRC by the 19th of the next calendar month (22nd if you pay electronically).
Why are HMRC introducing RTI?
HMRC are introducing this new legislation for a number of reasons:
– To enable HMRC to have a more efficient response to PAYE errors.
– To support the introduction of Universal Credits, this will streamline benefits into one payment.
– To ensure that people receive the benefits they’re entitled to, to reduce fraud.
– To provide the Department for Work and Pensions with up-to-date information about each claimant’s employment income more efficiently.
Step by step guidance to ensure that you are ready.
To be ready to report your payroll information each payday you must do one of the following:
- Purchase payroll software if you don’t already have any (some packages are free)
- Update your existing payroll software to a version with this functionality (your provider can advise on this)
- Use your accountant to do the reporting for you
Here is a list of some of Sage’s prices.
||Which software is suitable for you?
||Price’s from… £ per month
|For businesses with up to 10 employees.
||Sage instant payroll
|For businesses with up to 25 employees.
||Sage 50 payroll
|For businesses with more than 25 employees.
||Sage 50 payroll & their very best support package
|Online payroll for managing up to 15 employees.
||Sage one payroll
Check that you are registered for PAYE online.
You will most likely already be registered for PAYE online. However if you are not registered yet, and you are responsible for your own payroll reporting, then you will need to register for PAYE Online. This is vital for sending payroll reports to HMRC and being advised of employee tax code changes.
Any inaccurate data may lead to an incorrect submission; therefore you should be checking that the following information you hold for your employees is up to date:
– Date of birth
– National Insurance Number
Please note that every employee will need to go on your payroll including students and casual workers.
Penalties for incorrect & late submission for 2013-14
Penalties for late returns
– There will be no change to the penalties for late filing of returns for the tax year 2013-14. The current penalty regime will continue to apply at the tax year end. There will be no penalties if in-year Full Payment Submissions are submitted late.
Penalties for inaccurate returns
– Penalties for inaccuracies may apply to in-year returns from the 2013-14 tax year.
Late payment penalties 2013-14
– For the tax year 2013-14, HMRC will continue to use a risk-based approach to identify employers who are not complying with their payment obligations and who therefore might be liable to late payment penalties. Where employers who are not complying with their obligations are identified, late payment penalties may be charged.
– HMRC will notify employers who may have defaulted on either a filing or payment obligation as soon as possible to enable them to get back to compliance quickly and avoid any further penalties for future failures.
How to deal with corrections?
If you were to make an error on your payroll there is no need to make another submission as HMRC will be made aware of this when you make your next submission. This is done by reviewing the “year to date” figures. However you will need to ensure that any errors are rectified under your own payroll system.