Real Time Information (RTI) is an H.M. Revenue and Customs (HMRC) programme which will replace the current Pay As You Earn (PAYE) system in April 2013. The aim is to simplify employers' and HMRC's own operations and to provide employees with information more quickly. Throughout 2012 Sargent-Disc worked with HMRC on a twelve month RTI pilot, and has now produced an Introduction to Real Time Information to demystify the process.
Real Time Information (RTI) is an H.M. Revenue and Customs (HMRC) programme designed to improve the operation of Pay As You Earn (PAYE). A single integrated real time process, will in April 2013 replace separate end of year, P45/P46 and payment procedures.
HMRC has developed RTI with the aim of simplifying employers' and its own operations and to provide employees with information more quickly. The reliance of RTI on accurate data, combined with HMRC's strategy for data cleansing should also improve the quality of individual records maintained by HMRC, reducing the risk of individuals being taxed incorrectly.
HMRC invited Sargent-Disc (SD) and a cross section of software developers and employers to work with them on a twelve month RTI Pilot which began in April 2012.
The fundamentals of PAYE such as the use of codes, employer deduction of tax and National Insurance remain unchanged. However RTI does change how and when employers and pension providers report, in three key ways:
1) PAYE information will be delivered to HMRC online by the employer/pension provider when or before the payroll is run - sharing information on tax, National Insurance Contributions and other deductions on a weekly or monthly basis.
2) The year end returns process for completing forms P14 and P35 will disappear.
3) P45 will still be given to employees, however to simplify administration associated with starters and leavers the P45 and P46 forms will be contained within the Full Payment Submission (FPS)
Employers will be required to file a Full Payment Submission online with details of all the employees being paid - in the same way they submit forms to HMRC now via EDI or the Government gateway. The FPS will contain pay period and year to date figures, details of starters and leavers and new data sets such as 'hours worked'.
Employers will continue to provide to their employees, a P60 and form P11D (expenses and benefits in Kind).
The transition to RTI reporting requires a first Full Payment Submission (first FPS). The first FPS must include every individual employed since the start of the tax year to achieve Payroll Alignment. This will therefore also include staff that have either left or not been paid during the period. The key difference between the first FPS and all subsequent FPS submissions is that the latter will generally only provide information for employees who have actually been paid in the period.
Due to the additional complexity of Payroll Alignment for larger PAYE Schemes, HMRC will be separating the processing of Payroll Alignment and payment information. Employers with PAYE Schemes covering more than 250 employees will also need to complete an Employer Alignment Submission (EAS) - a process specifically designed for Payroll Alignment, before despatch of the FFPS.
The EAS is designed to enable HMRC to align data for individual PAYE Schemes. HMRC will compare the data with the information they hold on the National Insurance and PAYE Service (NPS). Where differences emerge, HMRC's records will be updated to reflect the information held by the employer.
Improving data quality is important preparation for a successful transition to RTI. Over 80% of data quality problems are caused by holding incorrect information about a persons Name, Date of Birth or National Insurance Number.
HMRC has recently produced a YouTube video aimed at employers, giving them advice on how they can get this information right.
Sargent-Disc is already developing RTI software systems and during the RTI pilot April 2012 to March 2013, Sargent-Disc will be:
Testing the integration between Sargent-Disc's systems and HMRC
Reporting on the time resource involved in submitting RTI and any risks or issues involved in its preparation
Reviewing the clarity of HMRC's RTI communication
Checking that the Bureau/Shared Service, agent arrangements work well
Feeding back to HMRC on Payroll Alignment and data quality issues
Providing the evidence base for effective RTI business and PAYE processes
Clients will benefit from the RTI systems Sargent-Discs developing in close liaison with HMRC's developers and which will provide clients with a smooth transition to RTI and the opportunity to be. early RTI adopters.
There is a wealth of support material about improving payroll data for RTI on the HMRC Website , which includes downloads aimed at individuals and information for employers using RTI. There is also further information about Real Time Information and a webinar with more general information about RTI for employers.
Sargent-Disc's payroll service enables companies to focus on their core business, control costs and benefit from Sargent Disc's knowledge base and expertise.