Even for payroll experts, the HMRC can feel like a bit of a closed book. Thousands of pieces of paper being shuffled, thousands of numbers being calculated. But in 2013 the concept of Real Time Information (RTI) was introduced, and things started to change…
What is RTI? Good question. Real Time Information for payroll is a system that helps organisations stay on top of compliance and ensures employees pay the correct amount of income tax.
The whole idea was to improve how employers submit Pay As You Earn (PAYE) information about their employees to HMRC. Because HMRC needs to know what you’re paying your people.
Since its introduction 10 years ago, employers have been able to report changes like adjustments to salaries and file payroll documentation ‘in real time’, electronically. Today, RTI makes payroll people’s lives so much easier. This article is here to provide you with clear and actionable guidance on using the not-so-newfangled RTI.
The impact of RTI on everyone
RTI is an incredibly efficient tool for your payroll department. It saves time, effort and considerable amounts of money by reducing the need for admin costs. It also makes sure that your team is unlikely to have to pay extra tax when they reach the end of the tax year.
RTI submissions allow and encourage the user to change your team’s details, making everything that little bit more accurate (like National Insurance contributions and tax calculations). The result? Fewer to no mistakes and a decreased likelihood of your people under or overpaying on their contributions.
For HMRC, having this information in real-time allows them to process everything quickly, easily and more accurately. They will have accurate information at their fingertips and won’t have to be issuing over- or underpayments like they’re going out of fashion.
Full Payment Submission (FPS)
Full Payment Submission (FPS): This is your main RTI submission. When you pay your team, you submit a wealth of information to the bods at His Majesty’s, including:
- Details like staff names, addresses, tax codes and NI numbers
- The net amount you’re paying them
- The amount of Income Tax and NICs that need to be deducted
- If they’re a starter or leaver (employment status)
Based on that information, HMRC know how much your organisation must pay for each team member.
Employer Payment Summary (EPS)
After the sums have been done for the FPS, you’ll want to complete an EPS. An EPS is used to report the figures that you wouldn’t include on the FPS. These values are the deciding factor on what payments you’ll have to make to the HMRC. EPSs are usually submitted once a month, or once a year in some cases. Here are some reasons for why you might send an EPS:
- If you’re making an Employment Allowance claim
- If you want to reclaim any statutory entitlements (like maternity or paternity leave)
- For CIS deductions (applies to limited companies only)
- If you need to make a payment for the Apprenticeship Levy
- Bank account details – if in the case you’re due a refund from HMRC
- Create a no payment – for when you haven’t paid an employee for an entire tax month
- Scheme ceased – for when your organisation does not need the PAYE scheme anymore and to tell them you won’t be making any more submissions
Your obligations under Real-Time Information
Your organisation is obligated to make submissions on time, in sufficient numbers. If for some reason your FPS was submitted late, you didn’t send the expected number of FPSs, if you didn’t send an EPS when you didn’t pay an employee taxes in a month, you’ll be facing Government penalties.
If you happen to submit FPS late one month, you’re less likely receive a penalty. Instead, HMRC might send you a reminder about your obligations. You’ll also be given a bit of grace if you’re classed as a new employer and your first FPS was sent within 30 days of paying your people, as well as if it’s your first time failing to send a report on time.
The importance of accurate and timely reporting
It goes without saying that it’s important to report in an accurate and timely manner. As we mentioned above, if you’re late with your submissions you may be liable to penalties. If you make mistakes on your submissions, you’ll find yourselves in the giant time suck of having to send another RTI submission making the corrections.
Payroll software and RTI
Payroll software can be a godsend when it comes to quickly and accurately dealing with your RTI submissions. As long as you have a reliable, reputable vendor who is RTI compliant, you’re away! A trustworthy payroll software provider will free you up to focus on other operations, while making sure your RTI is submitted timely and correctly, staying compliant all along the way.
Different payroll platforms will have different ways of doing RTI, but here are the basic steps when it comes to submitting your RTI:
Steps to prepare for Real-Time information:
- Check your software has RTI capability and it’s fully enabled
- Make sure your data contains only people you currently employ
- Log into HMRC Online with your organisation’s credentials and make sure you’re registered for “PAYE for Employers”
- Make sure the references from HMRC Online and the Employer page on your payroll software are the same
- Ensure the Accounts Office Reference is right on your Employer Page
And when it comes to paying your employees…
- Submit your pay run like you usually would
- Confirm the pay run and click “RTI submission” on your software
- Find “create an RTI submission” or similar (it’ll differ on different platforms)
- An FPS will then be created for you to view
- Enter your user credentials on HMRC Online and hit “send”
How does payroll software handle RTI reporting and submissions?
Payroll software is your best friend when it comes to carrying out RTI tasks like:
- Recording your peoples’ details
- Working out pay and deductions
- Reporting payroll info needed for HMRC
- Calculating how much you owe HMRC
- Calculating statutory payments
How often to file with RTI?
When it comes to filing different reports, it can differ. Here’s a quick snapshot of what to expect with different submissions:
|Every time you pay an employee (before or on the day of payment)
|EPS (including Employment Allowance Claim and CIS Deductions Claimed)
|Only when needed e.g. you have something to reclaim and pay. However we recommend submitting monthly by 19th of the following month, for best practice.
Avoid penalties & staying compliant
Staying compliant means you need to be on it with your RTI. Making sure you triple-check the data you’re inputting and submitting on time will stop you making needless mistakes.
If you decide to outsource your payroll or use payroll software, do your due diligence and make sure it’s RTI-compliant and trustworthy. Outsourcing can be a wonderful way to take all this off your plate. A payroll platform will automatically handle all your RTI submissions and it’ll do it on time, while keeping you compliant.
If you fail to stay compliant with your RTI, penalties will be looming over you. You’ll be hit with a penalty if you don’t file one or more RTI submissions by the due date, except if you have a decent excuse for not filing it and you file it promptly afterwards.
How much you’ll be liable to pay depends on the number of employees you have:
|Number of employees
How to rectify RTI errors
If you do unfortunately make a mistake, don’t fret! You’ll have to correct it though. Here’s a table to show you the basics of making corrections.
|What to do
|Wrong pay / deductions
|Update the year-to-date numbers in the next FPS if the mistake was made in the current tax year. If you submitted the incorrect pay /deductions for tax years 2020-2023, submit another FPS with the right year-to-date figures. If it was wrong in the tax year of 2019 to 2020, submit an Earlier Year Update showing the difference between what was reported and the correct figures, or another FPS with the right year-to-date numbers.
|Flexibility payment / pension death benefit
|Click “flexibility” or “pension death benefit payment” then correct the “pensions drawdown taxable payment” or “pensions drawdown non-taxable payment (or both), noting the difference between your original report and the right numbers.
|Payment date in FPS
|Send another FPS with the right payment date, writing “H-correction to earlier submission” in the “late reporting” box. It should be sent by the 19th of the tax month after sending your erroneous submission.
|Employee’s starting / leaving date
|Make sure you rectify this in the payroll records with the right date. There’s no need to tell the HMRC of this change when your next FPS is due, because doing so could cause a duplication.
|Employee’s personal information
|Make corrections on the next FPS, but only tell HMRC of updates to one bit of your employee’s details, so as not to duplicate records.
Real-Time Information makes life easier, but why stop there?
Cintra makes RTI reporting an absolute cinch. We have everything you need to manage your RTI with accuracy, efficiency and compliance. Cintra makes the complex simple, the difficult straightforward and payroll a delight.
We’re proud of what we do here, and we’re proud of our payroll solutions. We can offer you the payroll software to make all these hassles seem simple, or an outsourced solution that takes them off your plate completely.
So, book a demo today and we’ll show you how RTI can become a breeze in no time!
Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2023-24 spanning tax, National Insurance, pensions, statutory payments and more.