Payroll is one of the most critical functions for a business, and making mistakes can cause problems and tension with employees. At Harris Bassett Limited we operate a dedicated payroll service run by a specialist department, and many of our clients have benefitted from outsourcing this function to us. One of the imminent changes on the horizon is Real Time Information (RTI) and this article summaries the practical impact for your business.
RTI is a new system that is being introduced by HMRC to improve the operation of Pay As You Earn (PAYE) and is one of the biggest changes to PAYE since it was introduced in 1944.
Under the HMRC RTI system, employers will be required to send data about PAYE, NIC and student loans every time they pay their employees. Rather than submit these details at the end of the tax year through a P35/P14 return, HMRC will collect this data every time a payment is made to the employee, which is a significant change from the current system. Additional information may also be required when the employer remits the tax and national insurance to HMRC.
HMRC has confirmed that it will go live with RTI in April 2013.
RTI will impact on three key areas of your business:
HMRC have identified a number of pieces of information about employees that are critical to RTI. An employer will not be able to make RTI submissions to HMRC without providing the employee’s surname, forename, address and post code, gender, date of birth and normal hours worked per week. The national insurance number is desirable; however not knowing it for some of your employees will not stop submission to HMRC.
RTI will require employers to transmit details about the tax and national insurance treatment of payments to HMRC each time a payment is made. Additional employee data (such as the number of hours they worked) will need to be acquired for inclusion into the payroll system. Your payroll software will need to be RTI compliant.
Under RTI, HMRC will automatically be aware of the tax, national insurance and student loan liability each month. The employer will have to make an additional monthly submission if there is any adjustment to the payment made to HMRC. Adjustments may be due for Statutory Maternity Pay recovery and compensation.
Harris Bassett Limited can deal with the submission issues for your business as part of our payroll service. If you would like more information on RTI, or would be interested in considering Harris Bassett Limited to run your payroll function, then please contact Jackie Joyce-Brown on 01792 772627 or e-mail any queries to [email protected]