Real Time Information – New Payroll Procedures

What is Real Time Information/RTI?

With effect from April 2013 the payroll reporting for employers is changing.  Instead of filing P14/P60’s and P35 at the end of each tax year on each employee, the information must be filed in Real Time.

This system is going to be filtered in, so not every employer will need to adhere with effect of 6/4/13, each employer will receive a letter notifying them so they will need to change to the new PAYE reporting when notified. 

This in effect means that every time an employer pays an individual, whether they are casual/part-time or full-time, this must go through the PAYE system and filed directly across to HMRC, so they can keep up to date with each individual’s earnings throughout each tax year as it occurs, not at the end of each year. The PAYE system will be more up to date, leading we hope, to more frequent updating of individual’s tax codes and less over and under payments.

Before any employer can run the RTI, the employer will need to align their employee records with HMRC’s.  In effect this means that each employer will need to ensure that their employee records are right up to date.  This is information such as addresses of employees, changes in names, correct dates of birth, correct National insurance numbers etc.  We are advising that each employer asks each employee to fill in forms with the required information to ensure the current information each employer holds is correct.

Once obtained this information is filed online with HMRC, thus aligning the employer’s records with HMRC.  This is critical.   

If the information held at HMRC on each employee is not the same as the information the employer is filing with HMRC,  the details of tax paid, national insurance and net pay will not go on each and everyone’s individual income records held by HMRC.   This could mean in the future that it will affect the rights of individuals to make claims for statutory payments or benefits that they may be entitled to.

It is also essential for each individual to ensure that their PAYE information is tied up correctly by their employer and at HMRC.  Each employee should notify their employer and inform HMRC of any change in their circumstances such as a change of address, or name change.  This can be done by visiting:-

http://www.hmrc.gov.uk/report-changes/index.htm

There is much to HMRC’s legislation and it is advisable you seek the advice of a qualified appropriate accountant. 

Please contact :   Dawn Johnson FMAAT