The introduction of RTI is set to fundamentally change the way in which payroll information is reported by employers to HM Revenue & Customs (HMRC). All employers will join the programme between April 2013 and October 2013 at a date specified by HMRC.
Widely promoted by HMRC as creating efficiencies for employers as well as a better system for employees, there are procedural requirements introduced as part of RTI which will add to the compliance burden for businesses.
What is RTI and why is it being introduced?
RTI is a compulsory programme designed to give HMRC information ‘in real time’ about the earnings of individual employees. This will support the introduction of Universal Credits from October 2013 onwards.
There are no changes to the calculation of tax and National Insurance (NI) – it is a change in the method and frequency of reporting pay and deductions to HMRC.
What will RTI mean for employers?
All employers will need to tell HMRC details of pay and deductions every time employees are paid, on or before the date employees are actually paid. This may result in changes to internal procedures, particularly in relation to new starters and leavers.
Employees must still be provided with a P60 but the year-end reporting for employers will now be part of their normal RTI reporting.
When will employers need to be ready for RTI?
Every employer will receive a letter from HMRC with their ‘on-boarding’ date – the date from which the new reporting system must be used – which will be between April and October 2013. It is not possible to join before the ‘on-boarding’ date (unless taking part in the pilot). The first return will require year to date information from 6 April 2013 and therefore every employer will need to be ready from 6 April 2013.
What actions are required to be ready for RTI?
RTI compliant software or a payroll service will be essential. If a business has nine or fewer employee, the free HMRC software can be used. If there are ten or more employees, the employer will need alternative RTI compliant software or a payroll service.
At the ‘on-board’ date, each employer will align data with HMRC and having complete and accurate data in payroll records is important for this process. As well as confirming existing payroll data – such as full names, dates of birth, NI numbers, gender and addresses – normal working hours will also need to be included. All employees who are 16 or over now need to be included on the payroll irrespective of their level of earnings or frequency of work.
How can Albert Goodman help?
Albert Goodman is taking part in the current HMRC pilot. Our knowledge is up to date and we have practical experience of the changes needed to operate RTI efficiently and effectively.
Albert Goodman operates a payroll service for clients of all sizes and we are also able to assist with preparation for RTI.