The real impact of RTI on your payroll department.

Real Time Information is being introduced in 2013, and it’s the biggest change to PAYE since its inception in 1944. Although a highly automated process, it’s important to ensure that your data is correct and your payroll software is RTI compliant.

RTI will have a huge impact on 3 key areas for your business:

Data

HMRC have identified a number of pieces of information about employees that are critical to RTI. An employer will not be able to make RTI submissions to HMRC without providing the employee’s surname, forename, gender , NI number and date of birth. The address is also mandatory for new starters. There will be an HMRC checker to verify NI numbers.

Compliance

Under RTI, HMRC will automatically be aware of the tax, NI and student loan liability each month. The employer will have to make an additional monthly submission if there is any adjustment to the payment made to HMRC for things like SMP recovery and compensation.

Systems

RTI will require employers to transmit details about the tax and NI treatment of payments to HMRC each time a payment is made. This means that the tax decisions made about payments will be included in the RTI submission. Additional employee data, such as the number of hours they worked needs to be included in the RTI file. Your payroll software will need to be capable of sending the RTI submission direct to HMRC. A number of software houses have communicated to their clients that their software is payroll compliant, however it has become clear that not all Payroll systems will enable RTI.  For those with no more than 9 employees, you may be able to use HMRC’s free Basic PAYE Tools which will be updated next year to an RTI compliant version. Alternatively, we can act as payroll bureau on your behalf.

Margaret Scott, Pierce Chartered Accountants says “The introduction of RTI has been frustrating for smaller businesses. A lot of smaller clients we have recently helped have been using manual spreadsheets to administer payroll, and come April they won’t be able to do that any more. Other clients have been concerned that their payroll provider hasn’t developed the software to make it RTI compliant. In both cases our IT experts have been able to identify the best solution for the client, whether it’s a new RTI compliant payroll system or outsourcing to a bureau”

If you are unsure if your Payroll software is RTI compliant, or to discuss a software upgrade please contact Margaret Scott on m.scott@pierce.co.uk