Real Time Information (RTI) is one of the biggest changes to happen to PAYE since its introduction in 1944. With the new RTI system taking effect from April 2013, there are now less than six months to go.
Under RTI, employers will need to send PAYE, NIC and student loan data after each payroll, rather than with the end of year tax return.
With the RTI launch date just around the corner, the official HRMC advice is that you should start developing procedures now in preparation, if you haven’t done so already.
1. Make sure your employee data is correct
Before you change to RTI, it’s essential that the data you hold in your payroll records is complete and accurate. You must check and, if necessary, update the data for all your employees or pensioners – certain details are essential and must be accurate or the payroll reports you send to HMRC will be rejected.
This HMRC video explains more:
2. Prepare to send data every payday
Under RTI, you’ll need to report your payroll information electronically, on or before each payday.
You’ll have to review the processes throughout your organisation to check that you’ll have the information you need to record and report the data on time – whether weekly or monthly.
3. Register for PAYE Online
HMRC is recommending that employers do this now, if they have not already registered.
Even though there are changes in how you report your payroll information to HMRC, you will still need to register for PAYE Online because:
- PAYE Online is how you may still send certain forms to HMRC
- if an employee tax code changes, PAYE Online is one of the ways HMRC will tell you
- to send your payroll reports to HMRC, your software will need your PAYE login details
4. Introduce processes for collecting new starter information
New starter data won’t be sent separately to HMRC anymore; this information will be sent when you report your payroll information.
You’ll need to develop processes to collect and record the correct personal data from new starters, and you must store this data for at least two years.
5. Prepare for new arrangements for leavers
There will be no need to report leavers separately anymore. Although you’ll still need to give a P45 to staff who leave, you won’t need to report P45 part 1 information to HMRC via PAYE Online.
All you’ll need to do is set their leaving date on your payroll record and it will be automatically sent when you next report your payroll data.
6. Understand new year-end procedures
Your payroll software will update HMRC about all payments made so you won’t need to complete forms P35, P14 (end-of-year return) or form P38A (supplementary return), but you’ll need to continue to operate P60s and P11Ds.
You’ll also still need to complete your end of year declarations and indicate on your last payment submission that this is the final tax submission of the year.
7. Introduce contingency plans
HMRC recommends that you have contingency plans in place in the event of PC failure or loss of internet connection. HRMC suggests that you send in your reports in advance of the actual payday, so if problems occur you have plenty of time to rectify them in time for payroll.
8. Check that your payroll software will be RTI-enabled by April
If you are using payroll software, you’ll need to check that it will have the facilities to handle RTI processing.
If you use a payroll provider, they should handle RTI for you but you’ll need to check if they require you to change the way you report information to them.
Intuit and RTI
Many QuickBooks users are already saving time by submitting RTI information from QuickBooks as part of the HMRC pilot. Feedback from our pilot employers has been positive and they have found the process to be easy.
RTI-ready features will be available to all QuickBooks 2013 Payroll users from late 2012.
Find out more
HMRC video: Real Time Information – What it Means for Employers
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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