Overview of Real Time Information (RTI)
Real Time Information (RTI) is the most significant change made to PAYE. RTI is designed to make PAYE submissions more efficient and you’ll need to submit information to HMRC in real time when every time you pay employees.
What is Real Time Information?
RTI was introduced in the year 2013 and was launched by the Her Majesty’s Revenue and Systems (HMRC) requiring all UK employers to inform and notify the HMRC of their liability to PAYE i.e. Pay As You Earn either at the time of making payments to their employees or at the time of making the payments and since the information shared by the employers is on real time, it is known as Real Time Information. RTI, is seen and considered as the largest reform to the PAYE Scheme ever since later was introduced in the year 1944, where the employers are required to declare and inform the HMRC of their liabilities only at the end of the financial year in their P35 return. However, with the introduction of the RTI, all employers are bounded by law to submit an RTI return every single time they make payments to their employees as part of payroll arrangements. HMRC is known for its strict guidelines and heavy penalties for the defaulters; however they have given small consideration to the smallest employers and also to those who are submitting their RTI return for the very first time.
The very reason behind the launch of RTI was to ensure accurate assessment of the Universal Credit Claims which can only be possible if there is an accurate data of employee earnings. After the introduction of RTI, HMRC is able to pass accurate data of employee earnings based on which Universal Credit claims can be assessed. Also data from the RTI is helping in eliminating fraud and error in various benefits system along with supporting the administration of Universal Credit in many job centres. Based on the benefits of the RTI, the UK government is contemplating on making wider and better use of RTI data in order to improve data savings.
How to Submit Real Time Information to HMRC?
In order to have an efficient data management platform, HMRC originally opted for BACS as their strategic channel through which the employers have to submit their RTI returns at the time of making payments to their employees and the very reason for selecting BACS as their strategic platform was that it terminates approx 92% of the working population’s salary credits. Introduction of BACS as a strategic reporting channel for filing RTI return implies that it would work as a national banking payment system rather than relying on the Government RTI infrastructure. It means that the employers will initiate the payments to their employees by using BACS network or through BACS Service User Number (SUN) and thus is different from using internet or telephone or giving instructions to the bank for making the payments.
In order to submit the information to the HMRC, it is no longer mandatory to use the BACS and can rather use the Full Payment Submission (FPS) report to inform the HMRC regarding their liabilities. If you have a payroll software, then as an employer running payroll, it is mandatory for you to report the payments made to your employees and mandatory deductions in a Full Payment Submission either on or before you make the payment. In addition to making entry into FPS, you, as an employer have also to send an Employment Payment Summary (EPS) by the 19th of the following tax month in order to apply for any reductions such as statutory pay from the HMRC. In case you haven’t done any payment to your employees in a particular tax month, you are required to send an Employee Payment Summary to the HMRC, rather than submitting Full Payment Submission. It is a way to inform the HMRC that you haven’t done any payments and thus ensures that the HMRC does not send any penalties your way.
What happens if you don’t submit RTI to the HMRC?
As mentioned above, it is mandatory for every employer to file RTI returns by making Full Payment Submission and Employment Payment Summary in case no payment is made in a particular tax month. Thus, by default HMRC expects to receive FPS or EPS and in case they don’t receive either of it for a particular tax month, the concerned employer will be liable to pay the applicable penalties. Penalties are also applicable if you have missed the deadline of FPS/EPS submission. Thus, if you do not want to attract any liability, you have to take care of few things irrespective of the method you are using for the payroll management i.e. if you are outsourcing the payroll service provider or using a payroll software to manage the payroll in-house. In the former case, i.e. even if you have outsourced a payroll service provider, timely submission of RTI return is still your responsibility and thus you have to ensure that your service provider is complying with the RTI.
In addition to this, you must also be mindful of any changes for your business because of RTI compliance of your payroll service provider. For the second case, i.e. if you are managing the payroll by using Payroll Software, you need to check with your software provider if the software is RTI ready i.e. if it can submit RTI submission report to the HMRC. As per the HMRC, it is mandatory for all the employers to use a software that is legally complaint with the support required to submit PAYE in the real time.
As an employer, it is important to ensure that your payroll operation is complaint with RTI requirements and you can run through following checks in order to ensure the same:
- Quality of Data: In order to make your payroll operation complaint with RTI requirements, it is important to check and verify the data before entering the same into the payroll software.
- Payroll Software: If the payroll software that you are using is not PAYE RTI complaint, then you will be not be able to submit your RTI returns as per the guidelines of HMRC and thus it is important to have a PAYE RTI complaint software.
- Assessment of Compliance: As an employer, it is your responsibility to check and assess if the current payroll procedures are PAYE RTI compliant.
Areas to be considered while dealing with RTI
While dealing with the Real Time Information, you need to be careful while dealing with two areas, such as:
- Timely submission of FPS/EPS: As an employer, your job is not only restricted to make Full Payment Submission or Employment Payment Summary, in case you haven’t done any payment for a particular tax month, but also to ensure that you are well within the deadline. Any late filing of in-year Full Payment Submission and Employer Payment Summary will lead you towards heavy penalties from the HMRC. As per the HMRC, RTI penalties ensures that employers will make all the possible efforts in order to comply with their RTI reporting obligations and follow the deadlines religiously.
- Entering Right Details: In order to not to attract any of the HMRC’s penalties, it is important for you, as an employer to enter all the details correctly while filing RTI return. This task in particular demands for an extra vigilance because different elements of pay might need different tax and National Insurance contributions and thus for getting the calculations right, it is important to give utmost attention to the details and factors such as sick pay, expenses and pension payments need to be entered correctly. As per the HMRC guidelines, penalties for inaccurate returns will be determined manually based on the compliance checks.
Meaning of RTI For Your Employees
As an employer if you are filing your RTI returns accurately and as per the compliance guidelines, the employees of your firm will also get benefited from the process because an accurate RTI helps to improve the accuracy of tax codes during a particular year, which also means that only few members have to pay an additional tax rather than everyone paying an additional amount by the time you reach the end of the year. Also, an accurate RTI means lesser over or under payments.
How to Submit RTI in Bulk on Agent Level – Portfolio Wise in Nomisma Payroll Software
You can refer through below videos to see how to submit RTI in bulk on Agent level in Nomisma payroll software –
How Nomisma Solution Payroll Software will help in to submit RTI Submission Report to HMRC?
As mentioned above, in order to file your RTI returns well within time and as per the compliance of PAYE RTI, it is very important to have a payroll software which is fully compliant and can help in submitting RTI submission reports such as FPS or EPS to HMRC well within the deadline. There are so many payroll softwares available out there in the market that claim to be PAYE RTI compliant, however as an employer you need to be mindful before choosing one for your business.
Nomisma Solution Payroll Software is one such software that has all necessary features which make it a fully HMRC compliant payroll software, which not only gives you a detailed overview of the payroll software starting from tracking of work hours to generating detailed reports but also submits your payroll data directly to the HRMC before the deadline.
It is not easy for an employer to select a payroll software because the rules and regulations are ever changing and the software has to be updated with all the necessary changes. So, before you go ahead and buy the software with full subscription, Nomisma Solution Payroll Software offers you a 14-day trial option which you can use to try the software and see if it suits your business requirements or not.