Countdown to RTI for Payroll - What Every Employer Must Do NOW

"The time for procrastination is over, the time for real action is here."

Countdown to RTI for Payroll

The introduction of Real Time Information (RTI) for Payroll is now very close. RTI will start for most firms on the 6th April 2013. This law change will affect all employers and yet, worryingly, there are still employers who are ignorant of the details of these changes and who have not yet put in place any practical steps to meet the demands of RTI.

Below, Ken Davies, Mitchell Charlesworth's Director of Payroll Services strips away the technical jargon and outlines the key steps that every employer must take now:

You can download and print a PDF copy of this information here.

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The Key Facts of Real Time Information (RTI) for Payroll:

From April 2013, RTI will see employers submitting PAYE data to HMRC via the Government Gateway on or before any payment is made to an employee or pension recipient. HMRC claim that RTI will reduce administration for employers by removing starter, leaver and year end processes.

The structure of PAYE remains unchanged but RTI will fundamentally change how employers send information about their payroll to HMRC. These new measures could greatly increase the workload for employers who will be required to submit data on a more regular basis.

What employers must do now to prepare for RTI?

Check Your Data Quality:

  • Confirm employees full personal details.
  • Use HMRC's payroll cleansing service.

Check your Payroll Systems:

  • RTI compliant Payroll Software?
  • BACS Software capable of including the HASH?
  • Consider Outsourcing Payroll
  • Check your Payroll provider is ready

Liaise with your HR and Finance team:

  • Review recruiting and payroll procedures
  • Update HR stationery for standard hours and employment status questions
  • Maintain data quality
  • Employees notify HMRC of changes before you update data.
  • Pay HMRC in full and on time.

Ensure your employee data is as accurate as possible:

Fundamentally, RTI is a single process that will tie payroll and payment information together. As a result, accurate identifying data must be held for all of your employees.

As a matter of urgency, you must review all of your payroll records and ask your employees to confirm that you hold the following data correctly:

  • Full name, i.e. "Kenneth John Davies" not "Ken J Davis".
  • National Insurance Number.
  • Gender.
  • Date of birth.
  • Address.

It cannot be overstated that data quality is a key component in order for Real Time Information to work.

What other employee data will employers have to submit?

Over 100 items of data for each employee can be included in an RTI submission. Included in this data, HMRC will require an indicator of the number of hours an employee works each week. This is split into the following categories:

  • Less than 16 hours.
  • 16 hours to 29.99 hours.
  • 30 hours or more.
  • "Other" for those who work irregular patterns (bank or casual staff).

If you have performed identity checks on employees then you are urged to include passport numbers.

Who counts as an employee under RTI?

RTI submissions must be made to HMRC at the time each payment is made to any employee. Students, Casual Workers and Directors must be treated as any other employee for RTI reporting.

Employees include:

  • Students - Form P38(S) will be removed from April 2013.
  • Casual Workers - Form P38(A) will be removed from April 2013.
  • Company Directors.

Potential Problems that may be associated with RTI:

  1. Regular Advances of Earnings - HMRC have insisted that under RTI, payments made to anyone you employ must be submitted on or before payment is made.  If you routinely make advances in lieu of the regular payroll, HMRC will expect a separate RTI submission.
  2. Casual Workers and Students - Prior to April 2013 employers could pay both sets of workers without need for stoppages if they held the relevant forms and payments were below certain limits.  Under RTI both sets of workers must be treated like any other employee and appear on the regular payroll.
  3. Corrections - The key is to make sure your payroll is correct first time (so says HMRC). However, it is inevitable that corrections will be required. Where corrections are required, you will need to re-run your payroll in period and file a corrective RTI submission.

What will happen between now and the commencement of RTI?

HMRC have already contacted employers with their "On Boarding Date", essentially a flyer with a flow chart.  In the next 4 weeks HMRC will contact employers again to remind them.  Unless notified otherwise, employers will commence filing under RTI from 6th April 2013.

Importantly, HMRC will not inform your Agents should you outsource your payroll.  So, you are responsible for informing your Payroll Agent or passing the documents to your finance department.

Employers with over 250+ employees will undergo the Employer Alignment Submission (EAS). For those employers with fewer employees, their first Full payment Submission (FPS) under RTI will include alignment data. HMRC will then send a response which outlines amendments to your identifier data.

Contact Mitchell Charlesworth's Payroll Department For More Information on Real Time Information:

Ken Davies

If you have any questions about Real Time Information or are concerned about meeting your firm's obligations under RTI, please contact Ken Davies, Director of Payroll Services on tel: 0151 423 7500 or email:

Mitchell Charlesworth's outsourced Payroll Bureau currently now have well over 700 individual payroll clients with new clients choosing to outsource their payroll function to us every day.

As a direct consequence of RTI, many businesses are moving their payroll function to Mitchell Charlesworth as we will manage the complexities of RTI for you, ensuring your firm has the right systems in place and that your data is accurate and up to date for the purposes of RTI.

Further benefits of outsourcing your Payroll include:

  • We take the burden of legal compliance away from you
  • You do not need to worry about the jargon and technicalities of Payroll.
  • No payroll security problems
  • You and your employees receive a fast and efficient service
  • No need to deal with HMRC, Department of Work and Pensions or mortgage applications

A seamless operation ensures HM Revenue and Customs always has the information it needs and that your employees are paid correctly and on-time - every time. Because we employ dedicated professional staff, we meet all our clients' needs while establishing lasting relationships.

We look forward to hearing from you.

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