Payroll - Changing Legislation : A quick guide to RTI (Real Time Information).
RTI stands for 'Real Time Information' and is being introduced by HMRC for the beginning of the tax year in April 2013. It is part of the major overhaul of PAYE, and the main objective for its introduction is to support the introduction of Universal Credits in October 2013.
Universal Credits relies on pay related information being provided in real time, and RTI is the vehicle for providing this information.
What should I do to prepare for RTI?
Tip 1: Familiarise yourself with RTI and understand how it will impact the processes you use to undertake your payroll whilst ensuring your employees continue to be paid on time.
Tip 2: Check the accuracy of your employee data: In order to go through Payroll Alignment smoothly and continue to report successfully under RTI, it is important to start looking now at the accuracy of your employee data. Over 80% of data quality issues are caused by incorrect information such as: Missing/wrong incomplete National Insurance numbers, first and last names, date of birth etc.
Tip 3: Educate your employees about how important it is that the information they provide you is accurate as this ensures that the payroll is calculated correctly.
What can I do to prepare for my data for RTI?
To make sure you have the correct details for your employees, wherever possible check the information you need against an official document such as:
- HMRC and /or Department for Work and Pensions documentation
- Passport documentation
- Birth Certificate
What is a 'Full Payment Submission' (FPS) ?
For the first FPS, employers should include all employees who have been employed during the current tax year, including starters and leavers, or those that have not yet received a payment in the relevant period.
The first FPS should also include the hours normally worked, that is, the number of hours a person is expected to work , or regularly works, in a week.
1. If you are a large employer employing more than 250 staff, you must make sure you have already submitted an Employer Alignment Submission.
2. If you are a small employer and this is your first FPS submission, you must ensure that you have checked the accuracy of all your employee data before submitting.
What will happen at 'Year End'?
The consequence of RTI is that essentially a "mini year end" is being performed throughout the year - at the end of each pay run. This means that the formal process of "Year End" will effectively cease. However the last RTI submission of the year will contain an end-of-year marker to close off the submissions for the preceding tax year. Because payroll departments are supplying full information throughout the year, HMRC's goal of supporting Universal Credits can be achieved.
How will payroll software handle these extra RTI submissions?
Bond's Payrite software will handle the submissions of RTI data to HMRC. When the UK BACS channel is ready for RTI submissions this will then be used for organisations who pay their employees by UK BACS. If your organisation is using a UK BACS solution provided by Bond, then submissions will be seamless as RTI data will be automatically passed through to the BACS software by our Bond Payrite software.
How is Bond Payroll Services being proactive with the new RTI legislation?
Through Bond's payroll bureau - Bond Payroll Services - our Payrite payroll software will be used as part of HMRC's RTI pilot programme. Additionally Bond's UK BACS partner is engaging with HMRC in formulating an industry wide BACS solution.
The best and most up to date source of information is direct from the HMRC. The following links give further information on how RTI might affect employers and organisations:
If you want to find out more about how to embrace the new payroll & pensions legislations and ensure you remain compliant, attend our FREE Seminar on Wednesday 11th July 2012.
For more details CLICK HERE or call Peter Dixon on 01903 707123 today.