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Are you ready to supply Real Time Information?

Real Time Information (RTI) represents a major change in the operation of payroll. Employers will be required to send full details of tax, and other deductions from employees’ pay, to HM Revenue & Customs (HMRC) when employees are paid rather than at the end of the tax year as at present.

RTI will be phased in for all employers between April and October 2013.

Those with nine or fewer employees will be able to submit information monthly to HMRC using the Revenue’s website. However, as soon as there are more than nine employees, RTI compliant payroll software will be required.

At present, there are a number of payments which do not have to be reported to HMRC on year-end returns (for example, to employees who are paid under the thresholds for deduction of PAYE tax and National Insurance). It is important to note that, under the new arrangement, all payments to all employees will need to be reported at the time of payment.

We advise every employer to begin preparing for RTI now: –

  • Make sure you have the correct National Insurance number, date of birth and home address for every employee (including temporary and part-time workers).
  • If you are currently operating a manual payroll, and have 10 or more employees, you should start to review payroll software or payroll bureau options.
  • If you are operating manual payroll for 9 or fewer employees, check out HMRC’s “Basic PAYE Tools”. Start to think about whether you will want to use that option, or switch to payroll software or payroll bureau options. In this context, see more information at: http://www.hmrc.gov.uk/payerti/getting-started/paye-tools.htm
  • Think about how you pay all your employees at the moment (where appropriate, this should include directors, family employees… in fact everyone who may be paid salary, wages, or other payments as an employee). Will any part of your system result in any difficulty with monthly reporting of the figures to HMRC?

Finally, the introduction of RTI will, of course, enable HMRC to ensure that PAYE tax and National Insurance is paid over promptly, as they will be able to quantify liabilities as they arise (along with any penalties which may be accruing for late payment).

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