Real Time Information: What you need to know

With the Real Time Information (RTI) pilot under way, Diana Bruce from the CIPP presents an overview of the new PAYE regime and the changes you will need to consider ahead of full implementation in 2013.

By law all employers will have to submit RTI to HMRC by October 2013. This will mean reporting information to HMRC every time they pay their employees instead of summiting a summary form at the end of the tax year. Payroll software will collect the necessary information and send it to HMRC online.

The pilot project that started on 11 April will give HMRC, employers and software companies a controlled environment in which to iron out any problems over the next 18 months before filing becomes mandatory.

RTI: What to do next
  • If you use payroll software, you will need to ensure it can submit RTI data. Check with your supplier.
  • If you don’t use software, start planning now to get a system that will be able to submit data RTI electronically when you have to.
  • Firms with nine or fewer employees can use HMRC's free Basic PAYE Tools. A new version will be available once you are invited to operate RTI.
  • If you pay your employees by BACS, you will need to include the hash cross references in your RTI submissions. Check with your BACS supplier or bureau.
  • Once you begin to operate RTI, you may incur penalties if you do not submit your PAYE data to HMRC on time.

During the first month of the pilot, HMRC will work with 10 employers, representing a range of size, type and payroll software provider. The plan is to bring another 1,300 volunteer employers into the system by September 2012, expanding to 250,000 by March 2013.

RTI will become mandatory for all other employers, without exception, from April 2013 through to October 2013. The Department of Work and Pensions is driving the “all on board” timeline of October 2013 because RTI will have to be used employers by this date to support the introduction of Universal Credits.

Main changes for PAYE under RTI

All employers and pension providers will send details of all payments made (or to be made) through the payroll irrespective of the amount of pay (or pension).  There are three main changes that will happen under RTI:

  • Employers will be required to send information to HMRC about employees’ pay and deductions before or at the same time as they are paid by way of a Full Payment Submission (FPS).
  • The year end process of submitting P14s for all employees and a P35 summary and employer declaration will no longer be required.
  • Employers will retain new starter forms P45 and P46 but will not be required to send them to HMRC. The P46(Expat) form ceases and the future of the P46(Pen) is also currently under consideration.

While no employers will be exempt from RTI, a small number who are exempt from online reporting and filing will have to comply with a slightly different set of RTI requirements. 

RTI help and support

Guidance is still being drafted but it is hoped that final versions will be available by October 2012.  Follow the links below for further information.

Continued...

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Comments
mr. mischief's picture

Is it just me, but...

mr. mischief | | Permalink

The more I read about this the worse it all gets.

mr. mischief's picture

In short

mr. mischief | | Permalink

In short, if intorducing Universal Credits requires all of this, then Universal Credits need to be scrapped forthwith!

taxhound's picture

I am dreading this

taxhound | | Permalink

All of April is spent sorting out P60s/P35s at present. With monthly filing, I can see this becoming a huge monthly task. I have a lot of clients drawing a salary of £624 per month, no deductions. I prepare forms for them once a year and each quarter I tell HMRC there is no PAYE payment due. Under RTI it will become a nightmare...

Software

Fidodido | | Permalink

Not sure it will be onerous, i assume the software will just send everything to HMRC as it does now for personal and business tax returns?

If you do not use software, then yes, but Software is so cheap these days i do not see the point in doing it manually.

This is all on the assumption the software does it all though.

 

memyself-eye's picture

let me understand this

memyself-eye | | Permalink

So the small pub (say) with a couple of part time bar staff paid under the thresholds and covered by P46's will have to submit monthly returns (using the free toolkit). What are the chances

a) of them having the facilities to do that

b) getting it right.

So when they claim staff costs at accounts time there will be hell to pay?

and no, it's not an accountant's marketing goldmine, the ones I know aren't profitable now.

mr. mischief's picture

the accountancy challenge

mr. mischief | | Permalink

I have just spent half an hour sorting out a PAYE "non-submission" because the previous accountant had given me the wrong reference - despite this the database logged me as the agent and issued me with a "successful submission" certificate on 14 April.

HMRC are now disowning this certificate and threatening fines if not submitted.  Also, as well as the stick this one has the carrot of being CIS with a big repayment due so worth the half hour.

If we are going to get all sorts of queries and knock-backs every single month then something has to give.  Clients will be asked for higher fees for which they can see no benefit, quite rightly it's just a cost the country is imposing on employers - yet another one.

The HMRC software is pants.  Clients use this despite my advice not to, and every year at this time I get questions because it can't cope with things the software I use can cope with fine.  I don't use the HMRC software, so suddenly I have to picture what sort of blunder someone has programmed into it and suggest workarounds, knowing that the alternative is asking the client to call the not-much-helpline, wait 30 minutes and speak to someone who is paid to get rid of them as fast as possible, regardless of whether the problem has been solved.

This is all very well once a year and I don't charge extra for these calls and I can mostly come up with something which enables the submission to proceed.  But once a month this will definitely NOT be OK.

 

Time to get clients to change

Fidodido | | Permalink

All our clients use us as a payroll bureau and we use moneysoft, so there should be no issues. (hopefully)

I would use it as the starting point to get clients to start using your services for monthly payroll, or get them to use a software provider.

The benefits for the client can be easily explained.

 

Paula Sparrow's picture

Let's just be thankful

Paula Sparrow | | Permalink

That chapter 5 of the original discussion document seems to have been scrapped!

That's the "just hand your entire payroll over to HMRC to calculate deductions and pay your workforce" idea if you didn't read it

stevenwarboys's picture

Notifying HMRC CIS to paid along with PAYE

stevenwarboys | | Permalink

I cannot find anything on HMRC website relating to RTI, CIS to be paid to HMRC and the FPS.

 

On the FPS you notify them of CIS suffered which is reducing the PAYE liability, however how do you tell HMRC that the payment they should expect will be more than just the PAYE liability?

 

anyone?