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How does 'week in hand' RTI work?

We are about to bring our payroll process in house but we are unsure of the FPS processing dates

We are due to bring our payroll process in house for the new tax year however we are left somewhat confused to how our Accountants are currently processing the weekly wages.

Previously we use to provide the hours for Week 1 (Mon-Fri) to our Accountant on the following Monday morning (Week 2) and then pay our staff on the Friday (Week 2). For some reason, we were told this had to change once RTI came into play and we now have to provide the hours for Week 1, on the Thursday/Friday of Week 1, to be processed the Friday of Week 1 but still paid on Friday Week 2. So we are in affect 'guessing' the hours for the week (as we haven't received the timesheets at this point), plus or minus any fluctuations that have arisen in the week before which weren't picked up in the prior weeks payroll.

For example, say Week 1 Richard worked 43 hours, but his standard hours are 45 hours and we reported and paid 45 hours, we would then adjust this on the Week 2 report.

 

Week 1 paid and reported - assumed normal 45 hours

Week 1 Timesheet - 43 hours

Week 2 - assumed normal hours 45 less week 1 overpayment of 2 hours = 43 hours

It's an ongoing headache which I just don't believe is necessary.

When we take over the payroll is there any reason that we can't process Week 1 payroll on Monday of Week 2 and pay on Friday Week 2, providing the FPS payment date is before Friday Week 2 surely we have met the requirements to file on time?

 

Many thanks for you help,

 

 

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By stratty
11th Jan 2017 17:15

I believe it works like this. Guy works a week (say this week ending 13th Jan) of 40 hours.

That is paid and declared under RTI the following week (taking the week in hand) 20th Jan.

Simple.

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11th Jan 2017 17:26

You are correct. You are required to report under RTI on or before Friday of week 2 the amount of money you are paying to each employee on Friday of week 2.
How you calculate the gross pay & what timesheets you base it on is irrelevant.
Of course that payroll is dated Friday of week 2 (not Friday of week 1).
RM

Thanks (0)
11th Jan 2017 17:44

When it's paid.

No more complicated than that.

I've no idea why your accountant wanted it so early unless it's to buy extra time to process the payroll.

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11th Jan 2017 18:17

I agree with the others, but it is not just the FPS you should be concerned about.

It seems that while you have been paying "a week in hand", your payroll is actually being processed for the current week. Not only is the FPS for Week 1's pay (give or take some estimates) being submitted in Week 1, the pay for Week 1's work is being subject to PAYE in Week 1, which is incorrect as it should be based on the date of payment in Week 2.

You may well have a problem when you try to change over to processing the pay for Week 1's work in Week 2. Week 52's work has been subjected to PAYE as Week 52 and the FPS submitted as Week 52. You are not going to process the pay for the next week's work (Week 1), until Week 2, so you will have a gap. What are you going to file for Week 1?

The employees may be happy to get 2 weeks of tax-free pay in Week 2 against their pay for one week. Will they be happy to have only 51 weeks pay included in their form P60s at the end of the year?

Thanks (1)
11th Jan 2017 18:27

Ah ! Thank you, Euan. I see it now !

Yes, you need to check with the accountant to make sure he has actually done as you say (just a precaution...) and then maybe ask HMRC for their advice.

As Euan says, there's going to be a gap somewhere. Either Week 52 or Week 1 would seem to be the obvious time for a "leap-week".

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By tom123
11th Jan 2017 18:38

At the same time I would think about moving to monthly pay.

Perfectly possible, in conjunction with a sequence of 'weeks' for calculating relevant overtime.

I once moved 200 factory staff from weekly to monthly. It was getting embarrasing recruiting younger new staff, from a monthly pay background, and explaining this old fashioned weekly pay route.

Even the old hands said it was the best thing in the end.

Typically, I would pay basic hours (at 1/12 annual) on the 28th, with overtime calculated until the week ending Sunday around 14th.

I would publish a list of 4 and 5 week 'months' for the year on the staff notice board.

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