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RTI and payroll services

RTI and payroll services

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Just wondered how many fellow readers have considered how RTI will affect how you provide payroll services.

In my practice we have a lot of small limited company clients where directors have a fixed monthly salary and as such our payroll service is the completion of year end P35/P60's - it seems to me that RTI is going to create quite a bit of extra work?

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By Captainblack
21st Feb 2012 10:00

Might it mean less work?

If the payrolls are run using up-to-date local software or a cloud-based equivalent all the filings will take place automatically after each pay run. As I understand it, there won't be any P35s to adminster. No idea how this will work if people are not operating their payroll on a computer system though.

Captain

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By DMGbus
21st Feb 2012 13:36

12 or more actions a year instead of 2!

Pre RTI:

Draw up a year's P11 / payroll details for director a year in advance then file the P35 just after 5 April.  This equals two actions.  No need to incur cost of payroll software.  Minimal time cost.  Only need to touch the file / contact the client twice in a year.

 

Post RTI:

Buy payroll software that is RTI compliant.

Run the payroll 12 times in the tax year (once a month).

File the P35.

This is at least 12 actions / time costs in a tax year.

No doubt HMRC will fail to properly (accurately predict the extra costs) / assess the economic impact (extra costs) just as they summarily failed to do so with iXBRL.

 

So, here we have it: RTI is just like iXBRL - it is absolute trash, being a burden imposed on small businesses by those who are so obviously out of touch with the reality of small businesses.

 

However, there is good news for some...

Software writers will benefit (like they have recently with iXBRL).

Just as Insolvency Practioners will benefit from the new ESC16 rules from April 2012.

So the Government is looking after two industries!

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Replying to mrme89:
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By happy
21st Feb 2012 16:52

RTI...more work

DMGbus wrote:

Pre RTI:

Draw up a year's P11 / payroll details for director a year in advance then file the P35 just after 5 April.  This equals two actions.  No need to incur cost of payroll software.  Minimal time cost.  Only need to touch the file / contact the client twice in a year.

 

Post RTI:

Buy payroll software that is RTI compliant.

Run the payroll 12 times in the tax year (once a month).

File the P35.

This is at least 12 actions / time costs in a tax year.

No doubt HMRC will fail to properly (accurately predict the extra costs) / assess the economic impact (extra costs) just as they summarily failed to do so with iXBRL.

 

So, here we have it: RTI is just like iXBRL - it is absolute trash, being a burden imposed on small businesses by those who are so obviously out of touch with the reality of small businesses.

 

However, there is good news for some...

Software writers will benefit (like they have recently with iXBRL).

Just as Insolvency Practioners will benefit from the new ESC16 rules from April 2012.

So the Government is looking after two industries!

 

My sentiments entirely (except my understanding is that a P35 is no longer with RTI)

Processing directors payroll is going to become a lot more time consuming in my practice for sure.

 

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Euan's picture
By Euan MacLennan
21st Feb 2012 17:25

Minimal directors' salaries

If directors are being paid the standard minimal salary of not more than the NI Secondary (Er's) Threshold (£7,072 in 2011/12) to avoid any PAYE payments, their payroll will need be run only once a year in April at the start of the year.  Alternatively, you could run it once in March at the end of the tax year, but that could possibly be challenged by HMRC on the basis that if the director has actually been drawing monthly amounts, there might have been an overdrawn loan account.

No P35/P14.  Simple.

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By 0098087
22nd Feb 2012 11:32

Sorry but I disagree. It will have to be run monthly and it would be apportioned monthly and HMRC will want it monthly.

 

RTI is going to cause no end of problems. What about being told late when employees start or they leave, or when they've forgotten to tell you about changes because they are busy.

 

A lot of amendments is sure to trigger an enquiry. In addiiton, we are seeing the start of abloishing wage payments by cash as HMRC will want everyone to move to BACS payments as this is there chosen method for receiving the information.

 

What about schemes where employees are below the LEL and don't have another job. They didn't need a scheme before but will need one now. 

 

This govt is supposed to be cutting red tape, they are doing exactly the opposite. What do you expect when you have a man in charge of the treasury who has never had a real job in his life.

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By taxhound
22nd Feb 2012 12:21

I agree

It is going to cause lots of extra work although there will be no P35 (but still P11ds and we will still need to produce p60s for all employees)

At the moment payroll is a once a year job for many clients.  I update payroll, send out P35s etc and file them in April/May.  Each quarter I file a "nil paye due" on line for each client - which is boring enough.  I think I will have to open up each client and file the monthly pay once a month going forward.  Not difficult but very tedious and time consuming for c 100 small payrolls.

Even if you did decide to just put salary through as a lump sum once a year I bet you will still need to file 11 nil returns in between.

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By CL50
12th Dec 2012 16:24

RTI

DCS Payroll is currently part of HMRC pilot RTI scheme.

Directors PAYE  -  yes you will need to run a monthly payroll and send the RTI files to HMRC each month before the "Pay Day" or the client will incur a fine! Although in the first year in anticipation of the chaos that will no doubt ensue they say they will postpone penalties.

So no longer will accountants be able to do their "Spreadsheet payrolls" and there is no way around having to purchase an RTI compliant payroll system, and remembering to run the payrolls each month before the deadline. Unless you take the easy option and outsource to a Bureau with RTI experience.....DCS Payroll - 0141 333 1933 - We cover the whole UK and have attractive rates for Accountants 

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By Bill H
08th Feb 2013 15:10

RTI and directors

As we all know we pay Directors and sometime their wives sufficient salary so that no tax or NI is paid but it qualifies them for state pension. My question relates to Statutory minmum wage. What hours does one include in the RTI and would this mean an illegal payment is made if you included the actual hours worked?

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By Bill H
14th Feb 2013 16:11

RTI Directors and Statutory minimum wage

If a director works a 35 hour week, how can you RTI a monthly salary of below the Primary threshold without being caught within the SMW. Will non directors wives be the same?

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By bailiemartin
12th Mar 2013 22:22

Directors

To answer Bill H's question, directors are not subject to the minimum wages legislation- Simple

Will regards the Directors monthly pay- Surely the directors can draw on their loan account during the year at the same amount as the monthly PAYE salary and then run one payroll at the end of the year to then credit this.  If the loan needs to be paid back and then the salary paid out once at the end of the year to show the cash movements then so be it.

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