How Your Payroll Processes Can Make RTI Easier

Make RTI Easier

How Your Payroll Processes Can Make RTI Easier

 17 Mar 2017

Real Time Information (RTI) is a payroll legislation introduced by HMRC (HM Revenue & Customs). It means that if you are an employer, you’ll need to submit information to the HMRC every time you pay your employees. Most businesses were required to be RTI-compliant from April 2013. RTI means adding an extra step to your payroll procedures. If you are a business owner finding it difficult to understand how to be RTI-compliant, do not worry as we at payroll.co.uk will guide you by providing the required information and solutions related to your payroll matters.

HMRC introduced RTI in order to modernise the “Pay As You Earn” (PAYE) system. Nowadays, many people have more than one job or pension, and they even change jobs more frequently. This means employers sometimes pay the wrong amount of tax.  But since RTI provides HMRC with much more up to date information, it will be much easier to ensure deductions for tax are accurate. HMRC says that applying real-time PAYE to the payroll process can help make life easier for small businesses.

However, a new research report by HMRC revealed that small businesses are struggling with their Real Time Information (RTI) and PAYE responsibilities. The survey of small employers has revealed that a lack of PAYE understanding is partly to blame, especially when non-routine issues arise for example, maternity leave. The report also highlights that:

•    Dates present the greatest problem

•    PAYE reporting is too often closely tied to paying HMRC and the related tax month deadlines.

•    A lack of checks within businesses are accumulating problems

•    RTI is not being prioritised by businesses

•    HMRC support material is difficult to navigate and understand

Due to these errors the businesses are subjected to hefty penalties. So, in order to avoid penalties, it is important that you are fully aware of the changes to the payroll process and requirements of RTI.

What Are The Main Changes For Payroll?

  • RTI Has Become A Main Part Of The Payroll Process:-

Whenever a payroll run is carried out, RTI data on the payments need to be submitted before or when employees are paid. This includes information about new employees, the ones who quit their jobs, who has been paid, what was deducted and how much they were paid. Remember as an employer you need to include the details of all employees you pay, including those who earn below the NIC’s Lower Earnings Limit (LEL), temporary and casual staff.

  • Employers Won't Have To Complete Their Annual Returns:-

RTI simplifies end of year payroll paperwork as it eliminates the need for annual payroll returns because employers supply HMRC with up to date information each time a payroll is run.

  • Less Paperwork When Employees Leave Or Join The Business:-

 RTI submits details of employees who have started or left so additional forms will no longer need to be submitted to HMRC

  • PAYE Data Will Need To Be “Aligned” With HMRC:-

RTI is an opportunity to cleanse the PAYE database by ensuring that the information held by employers on their employee’s matches that held by HMRC. Most employers need to go through a separate alignment process before they run their first RTI payroll.

  • All Submissions Must Be Made Electronically:-

As an employer, you will need to update or acquire payroll software or use a payroll provider such as Payroll.co.uk. You will need to report your payroll information on or before any day when you pay someone. This will normally be carried out by your payroll software at the same time that the payments are calculated. Keeping your business RTI-compliant can get daunting for your business upon opting for in-house payroll process, so it is important that you seek help from a payroll solution provider that can take the burden off your shoulder.

Requirements for RTI

In spite of its complexity, PAYE was designed to make it relatively easy for employers to take on and pay new staff. But with little more required than a name, tax code, bank details and NI category, HMRC has been left with a legacy of records for taxpayers. All of this made-up data needs to be corrected. RTI requires a number of data fields that need to be completed accurately along with some additional types of data.

Mandatory data 

  • Full name (not just initials)
  • Gender
  • Date of birth (particularly important to check pension entitlements for the auto-enrolment regime and for benefits paid under the Universal Credit)
  • National insurance number (NINO) – This is mandatory provided it is available. This is used to cross reference employee data with both HMRC and the Department of Work and Pensions records.
  • Employees who do not have a NINO should be directed to contact their local Job Centre Plus office to find one.
  • Full address including postcode

New data fields 

  • Contracted hours – This includes the number of contracted hours only. You will not need to update this each time payroll is run based on actual hours worked.
  • Passport number - This is required for new employees, and is a sensible identity check for employers to confirm the employees’ date of birth and they are entitled to work in the UK. There is no requirement to collect passport numbers for existing employees
  • Seconded/ex-pat employees - A separate P45 (Expat) is no longer required. You just need to set an indicator in the relevant RTI submission field.
  • Companies with less than 250 employees- Such companies can align on the First FPS (Full Payment Submission). The First FPS sends details of employees employed from 6th April, including starters and leavers PLUS payment details of the payroll run.
  • Companies with 250+ employees-Such companies can align on the EAS (Employee Alignment Submission). You will require sending details of employees employed from 6th April, including starters and leavers

The Payroll Benefit

HMRC discovered that it was being driven by payroll. The small business that integrates RTI reporting duties and PAYE management with their payroll are creating a consistent, end-to-end process that makes it easier to meet requirements, and reduces late filing penalties.

HMRC Improvements

While small businesses did not escape criticism, it was the HMRC itself that the report identified as needing to make changes to drive the right actions within a business. In addition to the “better, not more support” recommendation, the report advised greater clarification and consistency in relation to penalties. This included raising the awareness of the causes of penalties and the use of a diagnostic tool to help small employers identify the cause of errors. However, it can be a daunting task for a small business owner to ensure that payroll process is making the RTI easier for your business and this is where we at Payroll.co.uk come into play.

How Can We Make RTI Easier For You?

  • By Staying Prepared and Updated- HMRC has moved larger companies onto RTI between May–September 2013. It is recommended that you ensure that the required changes to payroll processes and procedures, including assessing current and/or introducing new payroll software are implemented correctly.
  • By Checking That Employee Details Are Accurate-It is really important that records match up with those held by HMRC as information will be submitted much more frequently.  The Payroll experts at Payroll.co.uk know the ins and outs of RTI-compliance and they can ensure that your business is compliant with the changes made by HMRC.
  • By Checking If We Can Accommodate RTI in Their Existing Payroll Procedures- You need to establish how easy it will be to slot RTI into your current payroll solution. This is where an RTI ready payroll system like Payroll.co.uk, will make it really easy for you.
  • By Submitting Payroll Data to HMRC on Time- RTI payroll data must be sent to HMRC electronically. It is no longer possible for businesses to manually enter the data into the HMRC website. The experts at Payroll.co.uk are equipped with necessary software and can send your information directly to HMRC without you having to worry about it.
  • HMRC aligns its records of employees with the businesses’ own payroll records. This is important because it ensures the data submitted gets recorded correctly by HMRC.  Experts here at Payroll.co.uk will walk you through this process, helping you to identify and fix any issues quickly.  Payroll.co.uk can help you be RTI compliant with every payroll run. With us it is easy to use and make RTI and PAYE simple.

Ultimately, it will be for businesses to make use of what will hopefully be new and improved tools from HMRC. But as an employer, if you’re struggling to meet your RTI and PAYE requirements, do as HMRC suggests and tie it to your payroll processing. If you need a helping hand, give us a call right away and we would be happy to assist you in making your RTI a progressive factor for your business rather than a hindrance.