An Introduction to PAYE Real Time Information (RTI)

6 April 2013 will see a new way to report PAYE information to HMRC. PAYE itself will not change, just the way, and how often, you send PAYE details to HMRC.

Instead of sending all PAYE details in one go at the end of the year via forms P35, P14 and P60, from 6 April 2013 you or your accountant, or payroll bureau will have to send details every time a payment is made, at the time it is made using payroll software to send the details electronically as part of the routine payroll process.

Employers will continue to give employees a form P45 when they leave but they will no longer send forms P45 or P46 to HMRC. Instead starter and leaver information will be submitted as part of RTI.

Why is HMRC introducing these changes?

RTI will ensure that HMRC know the exact amount of PAYE and National Insurance due to them at any one time, instead of having to wait until after the year-end.

Tax codes and other deductions will be more exact and records will be linked in with benefits to ensure that the Universal Credit (the new state benefit system due to be phased in from October 2013) will work to full capacity.

What you need to do NOW 

• Review the data you hold for each employee ensuring the following details are accurate: Full employee name (must read as it does on official documentation), Date of Birth, National Insurance Number, Full postal address, Gender and Working hours.

• If you make payments via a payroll bureau or accountant you should discuss with them what changes you may need to make to your PAYE processes, make sure that they hold accurate data for each employee as detailed above and that they are RTI-ready.

• If you run your own payroll you will need to review your payroll procedures and assess your payroll software to ensure it is capable of processing and submitting RTI data.

• If you do not use payroll software, you will need to take steps to ensure that you are able to submit data to HMRC electronically by the deadline. If you are an employer with nine or fewer employees you can use either the free HMRC Basic PAYE Tools package or commercial payroll software that will allow you to submit the data to HMRC when you complete the payroll.

• If you pay your employees by direct Bacs, you must include a cross-reference or ‘hash’ in the submission and Bacs payment instruction.

• Ensure that everyone involved in the payroll process is up to date with all aspects of RTI.

What you need to do FROM 6 April 2013

You need to change some of the ways you report PAYE information to HMRC directly or via your Payroll bureau or Accountant, including:

• Providing new information, such as hours worked.

• Providing employee information for temporary and casual workers and employees paid below the National Insurance Lower Earnings Limit.

• Informing about starters and leavers during the relevant payroll period.

• Letting HMRC know whenever you change a payroll ID – otherwise HMRC will treat the change as a new employment, which will result in duplicate employment and incorrect tax codes.

Please note that the end-of-year returns (forms P35, P14 and P60) for 2012-13 will need to be submitted by 19 May 2013.

How we can help

RTI is a big change to PAYE and will take some time for employers to get to grips with. We can guide you through as much or as little of your preparation as you feel you need help with.

If you would like to discuss any aspect of RTI in more detail, please do contact us.

Further information can be found on HMRC’s website located at www.hmrc.gov.uk/rti

Click here to download a PDF version of this Fact sheet.