Real Time Information Payroll considerations
RTI is essential for the operation of Universal Credit, which is set to replace the current system of tax credits.
- Under RTI all employers require an internet connection and RTI enabled software.
- Employers with less than 10 employees may use HMRC's free software, however most commercial software is regarded as being easier to use.
- RTI requires reporting at the same time as, or before, each salary or pension payment is made, rather than at the end of each tax year.
- Nil returns are made.
- There are changes to what is reported. Forms such as P45 and P46 and the year end reports P35 and P14 will no longer be filed with HMRC although employers must prepare P45s and P60s for employees.
Under RTI employers are required to make:
- A Full Payment Submission (FPS) electronic submission report to HMRC before they make any payment to employees.
- An Employer's Payment Summary (EPS) if during a PAYE month an employer makes any statutory payments to HMRC (SMP or Sick pay for example) or suffers CIS deductions, or has not paid anyone.
- Earlier Year Updates (EYU) should be used to correct errors after 19 April following the end of the tax year in which the error was made. If correcting by 19 April, then an additional FPS can be submitted.
- Employers who use the BACS system for making payments to employees will have to file an additional report under RTI
- It is not compulsory for employers to use BACS.