ActivHR Consulting Ltd
Earnie payroll RTI update
Tuesday, 12 March 2013 10:23

What is RTI (Real Time Information)?

RTI is a new system for reporting pay, tax, National Insurance and other details to HMRC. Rather than submit these details at the end of the tax year through a P35/P14 return, HMRC will collect this data every time a payment is made to the employee.

It is thought that by collecting payroll data in real time, individuals’ tax deductions will be more accurate throughout the year. The intention is also to make the PAYE system easier to operate thus reducing the burden on employers and providing better tax administration to HMRC.

As an employer you will still be responsible for all tax deductions and calculations but instead of submitting this data once a year to HMRC, you will be required to return year to date figures at the same time as payment is made to your employees, be that weekly, fortnightly or monthly.

What will RTI mean for you?

A single process tying information and payment together – information will be sent to HMRC at the time you pay your employee. An FPS (Full Payment Submission) will be submitted each pay period in the same way that electronic forms are currently sent to HMRC including pay period, year-to-date figures, starters and leavers etc.

Quality of data will be very important when taking on new employees. To be included in an FPS the new employee data must contain Name, Gender, Date of Birth, Start Date and Address. There will be no end of year process meaning that P14s and P35s will be eliminated.

When does RTI begin?

We already have a number of customers who have submitted live RTI data to HMRC from May and this pilot scheme is going well. Over 70 companies are now registered for the pilot scheme.

The HMRC have now confirmed that from April 2013 all companies with fewer than 5000 employees will have to start making RTI submissions. If you have more than 5000 employees you will need to start submission between June 2013 and September 2013.

An update will be sent out for all versions of EARNIE in February 2013 which will include all the changes necessary for RTI.

Will RTI effect ‘electronic payments’?

If you currently use a BACS Accredited Software Supplier or a BACS accredited bureau service you will be affected by the RTI changes. All PAYE and pensions BACS files will require an additional four characters entered into field 7 (spare field) in the BACS submission file which will be used to identify the payment against the online submission. All EARNIE software will be updated to handle this, ensuring that your payments can be made and tracked by HMRC but you will need to contact your BACS supplier before you start RTI. If you currently use bank software you won’t be affected by the changes.

EARNIE can make BACS payments for you. We are fully BACS accredited and are ready for RTI – please contact your us on 01786 4589126 for more information on this service.