Real Time Information – The rules and the penalties

by Jake Martin, Title Text

2 min read

Real Time Information (RTI) heralds some important changes in the way businesses manage their payrolls, bringing with it extra regulatory hurdles and penalties for non-compliance. Below, we’ll run through what you need to know about RTI for your business.

What is RTI?

Real Time Information represents a major shift from HMRC in the way it collects payroll submissions from employers. New legislation introduced in 2013 means that you must now submit PAYE data every time you undertake a pay run. The rules were relaxed to give time for smaller businesses to update their systems to accommodate the changes. However, from March 6th 2015 all businesses are required to submit RTI.

One of the main reasons this new method was introduced was to ensure that HMRC could keep more up to date with tax and National Insurance deductions for staff who frequently change jobs or have more than one employer. Furthermore the introduction of universal credit allows HMRC to reconcile any balances between benefits and earnings.

For many larger businesses with dedicated teams the changes should not be problematic. However, for the vast numbers of small businesses across the country the changes may be a little more burdensome and, potentially, costly.

However the business also benefits as you no longer need to send forms to HMRC when someone joins or leaves and there is no longer a requirement for an annual PAYE return.

Rules and Penalties

Whether you operate a weekly, fortnightly or monthly payroll you are now expected to upload a Full Payment Submission (FPS) on or before the day employees are paid. Each month the business will also be required to submit an Employee Payroll Summary (EPS) showing any amendments for items such as sick or maternity pay, for example. Should it happen that nobody is paid in a particular month then a nil return EPS should still be submitted to HMRC by the 19th of the following month.

According to the Gov.uk website penalty charges can be issued if:

  • Your Full Payment Submission is late
  • You didn’t send the expected number of Full Payment submissions, or
  • You fail to send an Employer Payment Submission when no one was paid in the month previous.

Charges for any of the issues above increase with the number of staff. From 1-9 staff the penalty is £100, 10-49 staff is £200, 50-249 is £300 and 250+ is £400. Any payments that are more than 3 months late can incur an extra charge of 5% of the Tax and National Insurance figures that should have been reported. Furthermore if you run more than one PAYE scheme you can be charged penalties for each. All charges should be paid within 30 days of receipt to avoid incurring interest on them. Finally you must ensure that all returns are filled in correctly as penalty charges can also be incurred for careless or deliberate mistakes.

If you want to keep on the right side of HMRC make sure you are fully up to date with the RTI rules and procedures. Thorough accounting software such as Quickbooks Online can make managing your payroll and financial records as simple as possible.

For more on making sure your business isn’t falling short of regulation, check our compliance resources page.

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.

Help Your Business Thrive

Get our Newsletter

Related Articles

Real Time Payroll (RTI) infographic

Real Time Information (RTI) is the biggest change to the PAYE system…

Read more

Self-assessment tax simplified with QuickBooks

We breakdown the whys, hows, whens and whats to make sure you…

Read more

How to Construct Perfect Accounts

If you’re one of the UK’s 1.2 million construction contractors, you’ll understand…

Read more