What is Real Time Information?
Real Time Information (RTI) is designed to improve the accuracy of employee payment data submitted to HMRC by business owners. It was introduced in 2010 as part of the government’s efforts to “bring Pay As You Earn (PAYE) into the 21st century”.
What you need to know
The rules mean that as an employer, you need to submit information about tax and other deductions to HMRC each time you run a payroll. You also have to provide details about starter and leaver dates where applicable.
Each report is sent to HMRC electronically using a Full Payment Submission (FPS).You will also need to submit details of any taxable benefits you provide to employees (form P11D) and give your workers an annual summary of their earnings and tax paid for each tax year (form P60).
You will also have to issue workers with a P45 if they leave, though you do not have to send a copy to HMRC.
What else will I need to submit?
To comply with your RTI requirements, you’ll also have to send other forms to HMRC. Here’s a quick rundown:
- Employer Payment Summary (EPS)
This will be sent to HMRC each month and shows any adjustments you have made to your employees’ pay – such as Statutory Maternity Pay or Sickness Pay. You will also use this if you have not made any payments to workers.
2. Earlier Year Update (EYU)
You need to send this following the end of each tax year to correct any errors you have made or make adjustments to the information supplied.
What are the penalties?
If you send your submissions late, or they are inaccurate, you will be charged a penalty by HMRC. Here’s a quick rundown of what you will owe:
- Late submission
This attracts a monthly penalty based on the number of people you employ. These fines range from £100 all the way up to £400.
If you are three months late, you could also be charged an additional penalty of 5% of the tax and National Insurance you should have reported. You also face multiple fines if you run more than one PAYE scheme.
2. Inaccurate reporting
There are a number of factors that determine how much HMRC will charge, including:
- The amount of the potential lost revenue (PLR) – how much money HMRC has lost due to the inaccuracies
- Your ‘behaviour’ – whether the error happened despite you taking reasonable care, or if your mistakes were down to carelessness or deliberate concealment
- Whether a disclosure is prompted or unprompted – if you are up front about a mistake or if HMRC finds one first
There are six different ranges of penalty that HMRC will charge. These range from 0% of PLR (usually if you were careless but disclosed your errors voluntarily) right the way up to 100%.
Can I be exempt from RTI?
Yes – but only in very specific circumstances. The most common one is if you do not employ anybody who earns above the lower earnings limit for PAYE (£112 per week) and you have no other reason for operating a scheme – such as a worker having two jobs.
How can ClearSky Business help?
As you can see, staying compliant with RTI takes a lot of time and effort. The Federation of Small Businesses (FSB) has labelled the system “incredibly burdensome” – especially for smaller organisations. The group claims that the additional cost and administration time needed to comply with the rules could have a negative impact on the growth and maintenance of SMEs.
That’s where ClearSky Business comes in. We’re committed to taking all the hassle out of running your company, and RTI compliance is no exception.
We’ll process of all your RTI submissions, so you don’t have to. This gives you peace of mind that all your obligations are taken care of – leaving you free to get on with what you do best.
For more information, or to sign up, please call 08000 149 597 or email firstname.lastname@example.org.
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