PAYE revolution
Real Time Information (RTI) is a new way of submitting payroll data to the Tax Office. Instead of sending PAYE information to HMRC once after the end of the tax year, under RTI employers must submit their payroll data online every time their employees are paid. This is the biggest revolution in the operation of PAYE since 1945.
Once RTI is running HMRC won’t have to do end of year reconciliations of PAYE deducted and due for every employee and pensioner, as up-to-date pay and pension information will be received during the tax year. The Department for Work and Pensions (DWP) also need RTI in order to make accurate top-up payments to employees under the new Universal Credit benefit.
If you run a computerised payroll, your payroll software should be updated to cope with RTI. However, you should check with your software provider, as some packages are not going to be revised for RTI. In that case you will have to find new payroll software, or use the free facility provided by HMRC (for up to 9 employees), or ask us to help you process your payroll each month.
Some employers are already running an RTI pilot scheme, but it will be compulsory for most employers and pension providers by April 2013. When you receive HMRC’s invitation next year to join RTI, you can’t refuse.
The first step towards a smooth transition to RTI is to clean up your payroll data. This means checking you have accurate full names (not just initials or nicknames) and correct NI numbers for every employee. Dates of birth and addresses should also be checked. RTI will require you to report the hours worked by each employee, so you need to have a system in place to collect that information.