A simple guide to RTI – reporting PAYE in real time

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HMRC are changing the way that businesses report payroll, and it will affect every company.  Real Time Information (RTI) means you will need to submit PAYE information to HMRC every time you pay your employees, at the time you pay them.  For example, if you pay your employees weekly then you must submit PAYE information to HMRC weekly.  You will also have to submit the information electronically.

When will I need to report in real time?

You will be required to start reporting PAYE in real time from your first payday on or after 6 April 2013, unless HMRC has written to you with an alternative date.  HMRC are currently sending letters to all companies confirming when reporting in real time will start and providing information on the actions you may need to take to achieve this.

What new submissions will I need to make when RTI starts?

Full Payment Submission (FPS)

For the majority of companies the most important submission required will be the Full Payment Submission (FPS).  This must be submitted electronically each time any payment is made to an employee.  It must be made on or before the payment is made to the employee.

You will need to submit new employee information on the FPS that has not been required in the past.  In particular you will need to report:

  • Hours worked by the employee (reported in bands).
  • Passport number (UK and Non UK – though this is not mandatory).
  • Details of employees that have not reached the Lower Earnings Limit (LEL).
  • Indicate where employees aren’t paid regularly (e.g. maternity leave, or seasonal workers).

Your first FPS will also be treated as a payroll alignment submission, and it will be used to match your records to those held by HMRC.  In this first submission only you will be required to submit details of all individuals employed since the start of the tax year, even if they are not currently in your employment.  Each subsequent FPS will only include details of employees actually receiving payment at the time of the submission.

Employer Alignment Submission (EAS)

The majority of companies will submit their payroll records for alignment when they submit their first FPS.  However, large companies with more than 250 employees or companies with a complex payroll system must submit an EAS to allow alignment before their first FPS.

Employer Payment Summary (EPS)

The EPS is used to notify HMRC of any reductions that you are allowed to make to the totals already submitted via your FPS.  If you have recovered statutory payments, such as Statutory Sick Pay for example, then the EPS can be used to inform HMRC of these recoveries.

National Insurance Number Verification Request (NVR)

When you have taken on a new employee you can use the NVR to verify or obtain their National Insurance number.

Will there be PAYE forms that I no longer need to submit in RTI?

Some of the familiar forms currently used in PAYE reporting will no longer be used when we move to RTI:

  • P14 and P35 end of year submissions.  These will no longer be used after you have submitted your 2012/13 return and will be replaced by the FPS.
  • P46 – after 6 April 2013 starters and leavers should be included on your FPS.
  • P45 – after 6 April 2013 starters and leavers should be included on your FPS.  However, you may still provide a P45 to employees for their own records.
  • Form CA6855 – after 6 April 2013 you will be able to check a National Insurance number using the NVR.
  • P38(S) – after 6 April 2013, student employees should be included on your FPS.

You will still need to provide a P60 and where applicable, forms P11D and P9D to employees at the end of the tax year.

Once the transition to RTI has been made, it is hoped that the PAYE reporting process will be simpler and quicker both for employers and HMRC.  However, you should start to consider the actions that your business may need to take to prepare for the change.  In our next article on RTI we will consider the various steps that businesses may need to take and the assistance available when preparing for the change to real time reporting of PAYE.

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