Whether you employ one worker or one thousand, Real Time Information (RTI) for payroll helps businesses stay on top of compliance and ensures employees pay the correct amount of tax.
But despite launching in 2013, some businesses still do not fully understand how to use the RTI system – potentially resulting in fines and penalties.
In this blog, we’re going to explore the basics of RTI so your business can stay on the right side of the law.
What is Real Time Information?
RTI brought the UK’s payroll system into the modern age. Under the regime, employers can report changes to HM Revenue & Customs (HMRC) in real time, such as adjustments to an employee’s salary, and file payroll documents electronically in advance of making any payments to workers.
How do I use Real Time Information?
Following the introduction of RTI, employers are now required to have access to the internet and RTI-enabled software, such as Xero or QuickBooks.
Businesses that employ less than 10 people can use free HMRC software, but it is still recommended to use multi-functional and cloud-based software such as those already mentioned.
RTI information should be accurate and up to date. If your records don’t match or are corrupted, HMRC may ask you to pay the wrong amount of tax or trigger a compliance investigation.
It is suggested that employee details are checked against official documentation, such as their passport or driving licence, to avoid unnecessary stress.
When do I need to report Real Time Information?
Rather than waiting until the end of the year, the RTI regime requires employers to report at the same time or before each salary payment – usually on a weekly or quarterly basis.
This includes a Full Payment Submission (FPS), an Employer’s Payment Summary (EPS) if during a PAYE month an employer makes any statutory payments, and, if using the BACS system, an additional payment report.
HMRC uses these submissions to calculate the correct level of tax to be paid.
Get expert advice today
For help and advice with related matters, please get in touch with our expert payroll team today.