Real Time Information (RTI) is coming
There are big changes coming in the way that payroll information will be sent to HMRC.
The new system is called Real Time Information (RTI) and is compulsory for all employers, including charity employers. The starting date will be between April 2013 and October 2013. The exact date will be notified to each employer by HMRC.
Under the present PAYE system, HMRC only receives information of pay and deductions of tax and national insurance for each employee at the end of the tax year on forms P35 and P14. Under RTI employers will be required to make regular submissions to HMRC for each pay period during the year showing payments and deductions made from employees each time they are paid.
The way that RTI will work is as follows:
The first step is that an employer will need to send employee data to HMRC . HMRC will then validate the data using their own information. Employers need to ensure that information sent to HMRC is accurate, complete and up to date otherwise discrepancies will occur during data validation. It will not be possible to process pay for new employees under RTI if the validation checks made by HMRC fail.
The on-line payroll submission made by an employer each pay period to HMRC must be sent to HMRC before employees are paid. The submission must include all employees, even those earning less than the lower earnings limit. This is a change from the current system which does not require an employer to maintain a P11 for such employees.
Payments to HMRC
Under RTI, HMRC will be aware of the PAYE due on a monthly basis and so will be able to clamp down on employers who fail to make PAYE payments on time.
HMRC are issuing updated information on a regular basis on the new RTI system and full details can be obtained at http://www.hmrc.gov.uk/rti/employerfaqs.htm
We believe the information in this blog to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein. harry nicolaou & co limited is registered by the Association of Chartered Certified Accountants to carry out audit work.