From the 6th of April 2013 most employers (unless they have been contacted directly by the HMRC to tell them otherwise) will have to start reporting their PAYE (Pay as you earn) information to the HMRC in “real time”. This real time payroll information is often referred to as RTI.
Many people are confused as to what will actually change, and what these changes mean to them – in this article we hope to be able to explain it a little, but for even more information, contact your local HMRC office who will be glad to explain it to you.
RTI – What will change?
Employers already keep payroll information, and PAYE will still operate in the same way, the main difference is that after 6th of April, any time an employer (or their bookkeeper, accountant or payroll bureau) pays an employee they will have to send the HMRC the payroll information either on or before the date of payment.
It will also simplify the starter/leaver process as the information that needs to be sent includes start/leaving dates (where applicable) for all employees – including those that earn below the NIC’s Lower Earnings Limits.
Employers will no longer have to submit the end of year forms that they do currently (P35 and P14) and although employees will continue to receive a P45 when leaving their employment, the former employer no longer has to send the HMRC the P45 (part 1) or the P46.
What does this mean for me?
Employers (or their bookkeeper, accountant or payroll bureau) will have to submit the information to the HMRC on or before the date of payment using a Full Payment Submission. This will all be done online.
Your payroll software will generate the new FPS report you need for you which will include:
- The amount you have paid your employee(s)
- The amount of any deductions, for example: Income Tax and National Insurance Contributions
- The start/leaving dates (where applicable)
These details will be needed for every employee you pay, including any that fall below the NIC’s Lower Earnings Limit as mentioned before.
The Full Payment Submission (FPS) will also remove the need for some of the common forms that you are used to using. These include:
- P14 and P35 end of year return form – Instead each time you pay your employees the FPS will generate an Employer Payment Summary each month for any adjustments to what you owe.
- P45 – These are now just for the Employee’s own records and no part needs to be sent to the HMRC as all the starter and leavers information will be gathered by the FPS.
- P46, P46 (pen) or P46 (Expat) – Again, these no longer need to be sent to the HMRC as the information will be in the FPS. You can use the Starter Checklist to keep your own record.
- CA6855 (to trace or check a NI number) – You will be able to use your payroll software to issue a National Insurance Number verification request to check or trace a NI number from 6th April 2013.
- P38(s) – This will be replaced by the FPS.
The HMRC has provided a helpful printable checklist for business that are trying to get ready to operate their PAYE in real time.
This includes getting your payroll software updated, checking your employee details are all up to date and talking to your accountant, bookkeeper or payroll bureau as well as telling you a few things that you will need to do after the 6th of April deadline.