What is RTI? What Employers Need to Know About Real-Time PAYE Reporting
Real-Time Information (RTI) is a system that has revolutionised how employers report Pay As You Earn (PAYE) deductions to HMRC. But what is it and how does it work? In this article, we’ll provide a simple breakdown of what RTI is, why it is so important for your business's payroll and how you can ensure you’re always compliant, whether you outsource to a payroll provider or manage your payroll in-house.
Understanding RTI
Real-Time Information is a system implemented by HMRC in 2013 that requires employers to submit payroll information electronically in real time. This means reporting details about employee earnings, tax deductions, and National Insurance contributions (NICs) on or before the exact moment you pay your employees.
The two main RTI submissions are:
- Full Payment Submission (FPS): This is the most frequent submission, typically made through your payroll software each time you pay employees. It details each employee's gross pay, tax deducted, NICs and any other relevant deductions. An FPS is used to calculate and report the amount of tax and National insurance owed by the employer.
- Employer Payment Summary (EPS): The EPS is a report that notifies HMRC of any reductions in the employers’ payments such as statutory payments made to employees, apprenticeship levy (if applicable) and Employment Allowance.
Benefits of RTI for Employers
RTI was introduced to streamline the payroll process and make accurate and efficient reporting easier for payroll teams. Here are the three main benefits of the system:
- Less admin: Prior to RTI, employers had to submit year-end forms like P35 and P14, which could be time-consuming and prone to errors. RTI eliminates this need, freeing up time for payroll departments.
- Improved accuracy: Real-time reporting minimises the risk of errors that can occur with manual data entry or delayed submissions. This ensures HMRC has the most up-to-date employee information, leading to fewer penalties and faster processing:
- Integration with payroll software: Automated and semi-automated reporting is one of the best features of payroll software. By introducing RTI, HMRC enabled businesses to streamline their processes further and allowed payroll software to improve how payroll was reported in businesses of all sizes.
Complying with RTI
RTI compliance is mandatory for all businesses that pay employees in the UK. Failure to submit accurate and timely RTI reports can lead to penalties from HMRC, ranging in severity depending on the size of your business. Here are three essential tips to make sure you stay onside when it comes to RTI compliance:
- RTI-enabled payroll software: Invest in payroll software that integrates seamlessly with RTI.
- Meeting deadlines: Always submit your FPS on or before each payday to avoid penalties from HMRC.
- Keeping records: Maintain accurate payroll records for easy reference and potential HMRC audits.
How Finesse Resources Can Help
At Finesse Resources, we offer a comprehensive suite of payroll services, including RTI submission services. Here are some of the benefits of outsourcing your payroll to us:
- Reliable Reporting: Our team is highly knowledgeable about the latest HMRC guidelines and can accurately calculate and report your payroll deductions and adjustments. We ensure that all necessary details are included in the FPS and EPS and that these reports are consistently submitted to HMRC on time.
- Payroll Auditing: Conducting regular payroll audits is essential for maintaining the accuracy of your RTI submissions. Discrepancies between your payroll records and RTI reports can trigger issues with HMRC and potentially result in fines.
- Expert Guidance: As an employer, you might qualify for various payment reductions, such as the Employment Allowance or Small Employers Relief. Our team can assist you in identifying and claiming these reductions, maximising your savings and ensuring you are not overpaying taxes.
- Personalised Support: At Finesse Resources, we provide tailored payroll packages to meet your business’s specific needs, ranging from ad hoc support to comprehensive payroll management.
Focus on Your Business, We'll Handle the Rest
By outsourcing your payroll and RTI to Finesse Resources, you can free up valuable time and resources to focus on running your business. Our CIPP-accredited experts will give you the peace of mind of knowing your payroll will run smoothly every month.
To learn more about our services, get in touch with our helpful team.