Real Time is the biggest thing to happen to payroll since 1947 and will affect every employer in the country – from the huge multi-billions pound revenue companies to the local shop with one shop assistant.
Between March 2013 and October 2013 HMRC will ask every employer to start submitted payroll information for each period an employee is paid, therefore is you are on monthly pay you will have to submit to HMRC on a monthly basis and if you are weekly you will have to submit weekly.
At present HMRC collect payroll data on an annual basis when the employer submits the P35 between 5th April and 19th May. This scheme is to be scrapped and every employer is going to have to submit to HMRC, electronically, however frequently their payroll run is.
The main reason for this is at present HMRC do not know how much PAYE is owed from each company until they submit their P35 at year end, this way HMRC will be able to pursue late payments of PAYE Liabilities more effectively, this will also reduce Universal Credit fraud as HMRC will know how much each employee has earned constantly and how many hours a week they are working.
The plus side to employers is that there will be no need for P35’s P14s. The new system will also simplify starting and leaver processes.
When setting up for your EAS (Employer Alignment Submission) you need to have the following information for your company:
- Company PAYE and Accounts office reference.
- All employee names and address. This has to be extra with no shortened names and middle names included if they have them.
- All employee NI Numbers and tax codes.
- Employee payroll ID.
- Employee start and leaves date (if applicable).
The first payment submission (FPS) to HMRC will unfortunately being an arduous one as you will have to send the following to HMRC:
- All starter and leaver information in current tax year.
- All current employee information.
- All employee payroll information for the current period and year to date.
- All PAYE, NIC and Student Loan for the current period and year to date.
After each payroll period you need to tel HMRC your Employer Payment Summary (EPS) :
- Statutory payments recovered.
- NI Compensation on statutory payments
- Funding to help you pay tax refunds or statutory payments
- CIS deductions suffered (CIS paid is handled separately.
- NIC holiday.
- Or if no payment is due.
Some of the frequent question I have been asked while talking about RTI are:
I am self employed do I need to do anything?
If you are a sole trader then No, this only applies to those using the Pay as You Earn scheme, however if you are a director of a company it does apply to you)
I currently do manual wages, how can I submit under RTI?
If you have 9 or less employees HMRC have brought out a “Basic Payroll Tool” that you can submit through so that you do not need to buy a payroll software.
What about expenses?
Employee Expenses do not need to be reported though RTI