What you need to know
Payroll reporting is radically changing, and payroll information is one of the first (and there will be more) to be required to be reported in real time.
The most significant change from the current system to the new RTI system is that instead of submitting payroll data once a year to HMRC, as is the case for the 2012-13 tax year, employers will now be required to submit payroll details (pay, tax and NIC deductions, starter and leaver information) to HMRC at the same time as making payments to employees or directors.
This means that every time an employee or director is paid, the company must inform HMRC of the amount paid and the tax and NIC deductions made. All payroll reporting must be done electronically under the new RTI system.
What is the benefit of RTI?
HMRC’s main reasons for implementing RTI are to improve payroll reporting for both HMRC and employers by simplifying employee starting and leaving processes and enabling more immediate corrections of PAYE errors and PAYE coding alterations.
Additionally, the intention is that RTI data will link to the Department for Work and Pensions to enable claimants income to be more accurately assessed and benefits fraud more difficult to commit.
These changes are not unexpected, payroll reporting was due an overhaul as it has changed very little since it’s introduction in 1944.
Do I need to be concerned about RTI?
Yes, as RTI will be required for all small businesses (less than 5,000 employees) from April 2013, and all businesses from October 2013. Therefore, it will probably apply to your business from April 2013.
Sherwin Currid Accountancy clients can relax. Where we manage payrolls we will be submitting the necessary payroll information to HMRC, using an RTI compliant format from April 2013, ensuring there will be no impact to clients or their business.
As payroll information will now be submitted to HMRC on a real time basis, rather than just at the tax year end, HMRC will be aware what liabilities are due during the payroll year, rather than only at the end of the tax year when the P35 end of year returns were submitted.
This increases the importance of getting payroll details correct and making the correct payments of tax and NIC to HMRC, at the correct time.
Again, Sherwin Currid Accountancy clients can relax. Where we manage payrolls we will continue to provide full details of each employer’s tax and NIC liabilities, along with the dates of payment and payment information.
If you are not a Sherwin Currid Accountancy client and would like to discuss RTI and how it affects you, please do not hesitate to contact us.