ARE YOU READY FOR THE NEW PAYE REGIME?
From April 2013, HM Revenue & Customs (HMRC) is introducing a new way of reporting PAYE, known as Real Time Information, or RTI. The new system will see fundamental changes to the way in which employers and pension providers must report the payments and deductions they have made under PAYE. Umesh Modi explains…
This guide provides an overview of the RTI regime, and how the new requirements affect you.
WHAT IS RTI?
Real Time Information (RTI) is a new system of reporting details of pay and deductions to HMRC. It is also referred to by HMRC as “operating PAYE in real time”.
Under RTI you will be required to provide details of your employees’ pay and deductions to HMRC electronically each time they are paid. The information must be provided in a specified format within a certain timescale. You must make the report to HMRC online using RTI compatible payroll software. RTI is mandatory for all employers and will be implemented from 6thApril 2013.
Currently the PAYE data is sent only once a year to HMRC e.g. forms like Employer annual return (P35), P14’s at the end of tax year. From April 2013 and under new scheme of RTI, information will be submitted every time an employee is paid, be it weekly, fortnightly, four weekly or monthly.
GETTING READY FOR RTI
There are a number of steps you must take to prepare for the move to RTI and to ensure you are ready to start reporting in real time from April 2013. All employers will be using the RTI service by October 2013.
The following checklist summarises the key tasks associated deadlines necessary to ensure you are RTI-ready.
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Action |
Deadline |
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Get up to speed on RTI – what it is and what it means for you? |
Now
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Ensure familiarity with key dates and deadlines |
Now |
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Update existing software for RTI or acquire RTI compatible software |
By April 2013 |
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Ensure employee data is complete and correct |
Now |
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Update payroll procedures for RTI
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By April 2013 |
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Register for PAYE online if not already registered |
Now |
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Include new information in your payroll records |
By April 2013
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Align data with that held by HMRC |
At or before time of first RTI submission
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Start reporting in real time |
From April 2013
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FULL PAYMENT SUBMISSION (FPS)
A Full Payment Submission is the main type of document, and contains details of all employee payments and deductions, including income tax, NICs and student loans, together with details of any new employees and those who have left the business. It is particularly important to obtain accurate information for new starters. Without the complete basic data, you will not be able to file any of your employees’ pay details. In other words you are not permitted to ignore one employee and file for everybody else.
An FPS is required each time an employer makes a payment to an employee, either at or before the time of payment, whether this is weekly or monthly, and it includes those whose income is below the lower earnings limit for NICs.
The first FPS should include all employees who have been employed during the current tax year, including starters and leavers, or those who have not yet received a payment, together with the hours normally worked.
Subsequent FPS’ will contain pay and deduction details only for those employees that are actually being paid on that payday.
When you send your final submission for the tax year, you must indicate that this is the case and answer the relevant questions and declarations.
TIDYING UP EMPLOYEE DATA
For RTI to work properly it is important that the personnel data you hold on your employees is correct and complete. It is also vital that the details held by both of you and HMRC are identical.
Please use the following table to check that the data you hold about your employees meets HMRC’s RTI standards.
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Employee detail |
What to check |
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Name |
Do you have the employee’s official last name? Do you have the employee’s full and official first name(s), not just their initials? Have you spelt the employee’s names correctly? Have you checked the name and spelling against official documentation? |
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Date of birth |
Do you have the correct date of birth? Has it been provided in the correct format (ddmmyyyy)? |
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NI number |
Do you have an NI number and is it correct? You must not use a temporary or made up NI number! |
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This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here.
Umesh Modi BA ACA, is a Chartered Accountant and Tax Advisor, and a partner at Silver Levene LLP. He can be contacted on 020 7383 3200 or umesh.modi@silverlevene.co.uk
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