Maybe you have had a letter from HMRC or a software provider to advise you? Maybe you have seen it in the news or heard on the radio? Either way, here’s what you need to know.
Let’s have the basics
RTI is, in a nutshell, a new requirement by HMRC for all the information they currently receive at year end, to instead be supplied each time you pay your staff. Rather than filing reports at the end of the tax year, special new types of report will be filed each time you pay your employees. There are a few complicated procedures if errors are made, but if you can get everything right first time it will be quite straightforward.
I’m not sure about all this. What’s the point?
HMRC have recognised that lots of people these days have more than one job at any one time, may change jobs regularly or work sporadically. By requiring employers to file a mini-return each time they pay staff, it means that tax records can be kept more up to date.
It should minimise the chances of employees having tax either taken from their monthly pay in error, or due at the end of the year. It also means that the records will be more accurate in respect of benefit claims, and should help with decisions on benefit entitlement.
So, do I need to change how I do things?
Hopefully not too much. This is simply a change in the reporting to HMRC, not a change in your PAYE scheme.
If you are using up-to-date payroll software, you will probably need to check that all your information is correct and read the sections of your user manual on RTI, but it is likely that the developer will have updated the software to take RTI into account.
If you are using an accountant or payroll bureau for your payroll, feel free to ask them if they are RTI ready. They may be asking you to confirm some of the data they hold to ensure reporting goes smoothly, but once this is done you should be ready to roll.
What information will HMRC be wanting?
As well as full names, birth date, gender, NI number and hours worked for each of your employees, information sent to HMRC will include details of pay, tax, national insurance contributions, student loan deductions, pensions and details of new starters and leavers.
OK, but I’ve got loads of time yet, haven’t I?
Well, no. RTI comes into effect from the 6th April 2013, which means that your first pay date of the new tax year will need to include your first RTI submission. However, you need to make sure that you have all your records correct first.
You may need to set up login details with HMRC if you will be reporting information yourself. Check that your PAYE software is fully updated and RTI ready.
Finally there are special requirements if you pay staff by BACS which you really must sort sooner rather than later.
I think I am ready. Can I do a trial run?
Sadly, no. There was a pilot in place for a few employers from early in 2012, but there is no provision for practices for everyone else.
If you do make a mistake, there is lots of guidance on the HMRC website about which mistakes can be rectified and how to do this, but it is a bit complex for this sheet. I’ll keep my fingers crossed that you get it right first time.