Are you ready for PAYE Real Time Information?

Real Time Information (RTI)

RTI is a new system that will modernise the reporting of employees’ and pensioners’ pay and tax details. Employers and pension providers will be required to provide information about tax and other deductions to HM Revenue & Customs (HMRC) each time an employee is paid. The RTI reporting scheme will eliminate the current end of year reporting system.

This new system will affect all employers, large or small and will affect all employees whether full time, part time or temporary. The Paye As You Earn (Paye) system has been in place largely unchanged since its inception in 1944. The new system represents a substantial change to the reporting regime behind Paye.

Why the change?

The new system is being introduced to provide more accurate and up to date information on employees and pensioners. The government believes that RTI will improve both the UK tax and welfare systems. RTI is also a key component of the Department for Work and Pensions (DWP) plans for the introduction in October 2013 of the Universal Credit system. Universal Credit will replace the current benefits structure. DWP will use RTI to award and adjust Universal Credits to take account of employment and pension income.

What is the RTI Pilot Scheme?

HMRC will introduce RTI progressively to allow the new system to be tested. A pilot scheme, led by payroll software developers along with HMRC, started in April 2012. 10 employers successfully submitted RTI data to HMRC in April and there are now more than 500 employers on board submitting data for 1.7 million employees.

The pilot was extended to 1,500 employers at the end of September 2012 with 250,000 employers expected to be enrolled into the scheme at April 2013. The migration of employers into RTI will continue until October 2013 when all employers will be required to submit RTI data to HMRC. Chiene + Tait is enrolled in the pilot and we transmitted our first RTI file in September 2012.

What should you be doing now to prepare for RTI?

All employers must be ready to implement RTI by April 2013. Although this may seem some way off there are many things that employers can do now to prepare for the introduction of RTI.

The quality of data held in an employer’s payroll records will be key to the successful introduction of RTI for employers and ensure that RTI submissions are not rejected by HMRC. You must make sure that employee data is in the correct format for insertion into the RTI submission file.

You need to ensure that:

  • You have employees’ full formal names.
  • Date of birth is correct.
  • You have the correct National Insurance Number for employees.

RTI will not tolerate delays in the submission of data. Essentially an employee’s personal data must be ready to be transmitted to HMRC on or before their first payment date. An employer should review their current payroll procedures to identify the necessary changes to be RTI compliant. For example, collecting and receiving all new employee information to ensure this is captured in the RTI submission in the employee’s first pay period.

You should also speak with your payroll software provider to determine how and when they will be in a position to deal with RTI submissions and you should also plan for a period of testing both the RTI submissions and the complete payroll process to ensure that deadlines will be met.

Data quality checks and planning procedural changes will assist greatly on the migration to live RTI.

For more information on RTI or any other payroll matter please contact Neil Cameron in our Payroll Team by email at payroll@chiene.co.uk or call 0131 558 5800.