RTI stands for Real Time Information and it represents the biggest change to the way payroll operates for UK businesses since the PAYE system itself was introduced in 1944.
RTI was introduced in April 2013 but enforcement of the system was initially relaxed in order to allow businesses that had not yet adapted to the new system a little leeway. The new deadline is now looming, however, and HMRC is due to start issuing fines for non-compliance from April 6 2014.
MRC will penalise you if you are not submitting your Full Payment Submission (the submission made each time you make a payment to an employee) or an Employer Payment Summary (the submission made to inform HMRC of a change in your liability or where no liability is due) on or before the date that you actually pay your employees.
For ‘micro businesses’ employing fewer than 10 people the fine is £100 monthly per PAYE scheme operated. In order to avoid paying this fine and other potential penalties, follow these simple tips:
1. Choose appropriate software
Under the RTI system the appropriate information must be submitted to HMRC online. This means using appropriate software to process and submit the information electronically. HMRC does offer its own Basic PAYE Tools software but this does have certain limitations. It’s not a complete payroll package so it won’t produce payslips or record any other deductions unrelated to PAYE such as an attachment of earnings. It is also designed for businesses with 9 or fewer employees.
Choosing the right software will really simplify the process and a complete online accounting and payroll software package will help you with all aspects of managing your payroll.
2. Collect accurate information
You will need to complete and submit accurate employee details such as full names, dates of birth, current addresses and NI numbers. Under RTI you will need to provide information for every employee you pay, even if they are casual or temporary workers or earn less than the Lower Earnings Limit for NIC’s.
Full names should be used and double-barrelled surnames should be entered in full. Don’t submit ‘known as’ names such as Bob if HMRC records know the employee as Robert.
4. Dates of Birth
Make sure the date of birth is correct and use the format DD/MM/YYYY.
5. N.I. numbers
Only use the correct N.I. number. If you do not know it, leave the space blank and ask the employee to provide it.
6. Be prepared
The April 6 deadline is very close so prepare to make the switch as soon as possible. You may choose to outsource your payroll but if you decide to do it yourself, familiarise yourself with the appropriate software.
Sage One is currently offering a 30-day free trial of its payroll software package, which is HMRC-recognised and RTI-ready. Following that, packages are available from just £5, £10 or £15 per month, for 5, 10 and 15 employee versions.
It pays to be ready ahead of the deadline as you might otherwise have to pay a fine and will still have to pay for RTI-compliant software or a payroll service that uses it, potentially doubling the cost to the business.
***Photo thanks to en.wikipedia.org***