What is RTI?
In 2013 HMRC are introducing a brand new operation for PAYE called RTI which stands for Real Time Information.
Why is HMRC introducing Real Time Information?
RTI has been developed to improve the current PAYE operations and the aim is to:
* Make PAYE more accurate for individuals
* Enable HMRC to pursue late payments more effectively
* Reduce Tax Credits error and fraud
* Help support the introduction of Universal Credits
What are Universal Credits?
Universal Credits are the new welfare benefit which will gradually replace 6 main means-tested benefits starting October 2013:
* Jobseekers allowance
* Employment & Support allowance
* Income Support
* Child Tax Credits
* Working tax Credits
* Housing Benefit
When does RTI come into effect?
RTI will be phased in from April 2013 and will become mandatory for all employers by October 2013. Employers can volunteer to join the Pilot scheme before April 2013 but HMRC will invite employers to join RTI with the date they need to send their first 'payroll alignment submission'
What does it mean for your business?
Instead of sending information once a year at Tax Year End, employers will be required to submit information electronically to HMRC for PAYE, NIC and student loans etc. every time they pay their employees. All Employee data must be accurate, complete and up-to-date. Your very first submission must include all your employees expected to be paid in the current tax year, including leavers and those yet to be paid. If they are not on that first submission, HMRC will treat them as left. The very first 'alignment' submission can only be submitted once, so it must be completely accurate with the following information:
* Full official forenames and surname, in the correct order (i.e. Margaret, not Maggie)
* Full and correct date of birth
* Correct National Insurance number, (or passport number if no NI number)
* First 2 lines of address and post code
* Standard weekly hours worked
Each payment submission, sent on or before each pay date to HMRC, will mean they know exactly what PAYE and NIC payments will be due to them each month and will therefore expect the payments to match. These submissions will replace the P35 and P14s at the end of the tax year, and also means no more in-year forms to submit online such as the P46 and P45, as all starter and leaver information will be detailed on each payment submission.