Real Time Information | RTI | HMRC Requirements from April 2013

Real Time Information (RTI)

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RTI (Real Time Information) is a new payroll reporting system to be introduced by HMRC during 2013 and refers to the submission of employee pay related information at the time of payment rather than at year end. HMRC's principal aim of the move to RTI is to support the introduction of Universal Credits in October 2013, a government drive that is only possible if pay related information is available in real time.

The RTI scheme is currently in a pilot and testing stage with some 250,000 companies taking part - the HMRC timeline proposal is that the live scheme will be rolled out to all remaining employers with less than 5,000 employees in April 2013.

Changes Under RTI

The current PAYE system relies on the employer calculating Tax, National Insurance and other deductions for their employees during the year and then submitting this information at the end of each year via the online P35 and P14.

Under the new RTI system employers will still calculate the Tax & NIC deductions for each employee, using their payroll software, but instead of submitting this data once a year to HMRC, they will be required to submit the details at the same time as their payroll run, be that weekly, fortnightly or monthly.

The RTI data will be sent to HMRC either via the Government Gateway (as now) or via the BACS system , depending on how a company pays its employees. End of year returns (P35 and P14) will become a thing of the past.

Impact on Your Business

There is much press speculation that there will be significant problems come April 2013. The project is massive in its reach and ambition, it is a big bite even for an organisation the size of HMRC to handle.

It may be expected that HMRC’s PAYE Tools will be a safe harbour for micro business payrolls. Payroll software providers such as Sage, Liberty and Moneysoft are announcing their readiness for the change, and will be hoping for a business boost, as clients may move to them from less stable platforms.

At the moment advice is that this is the basic information that will be transmitted, and so needed, under RTI:

 Full name and address of employee.

 Date of birth.

 National Insurance or passport number.

 Gross pay.

 Tax and National Insurance deducted.

 Hours worked (in bands)

All businesses need to ensure they have this information on all employees, or their payroll stands the possibility of rejection.

Big Brother

Whilst the main reason for implementing RTI is for the universal credit system, there are other underlying implications.

With live information being transmitted, including National Insurance and passport numbers, HMRC and the authorities will know the whereabouts of large numbers of the population (or the counted population).

Knowing hours worked could have implications for the monitoring of the national minimum wage.

(This is not to imply that we condone illegal immigration or paying below NMW of course.)

For business owners operating as a limited company there may also ultimately be revelation of the rates of pay paid to directors, in comparison to dividends paid. Thus ultimately it is a possibility that there may be a move to tighten down on the tax efficient mix of pay and dividends, from the information provided under RTI.

Accounting & General Payroll Service

In house payroll systems of A&G utilise Liberty Accounts and HMRC PAYE Tools software. We believe this service will offer resilience to clients during and following the changeover to RTI.

We support and recommend the use of Liberty and PAYE Tools in-house by clients, and in addition we believe that Sage and Moneysoft will continue to provide effective payroll software for businesses.

Link to HMRC page on RTI.

For the Accounting & General pages on Accounts and Tax click here.