Real Time Information (RTI) is a system introduced by HMRC that requires employers to submit payroll data in real time, every time they pay their employees. It’s essential for businesses to understand how RTI works, what the requirements are, and how to ensure compliance. Here, we outline the key submissions employers need to make and how we can assist you in navigating this often complex process.
What is RTI?
RTI requires employers or their agents to make regular payroll submissions to HMRC for each pay period throughout the year. This ensures that HMRC has up-to-date records of employee payments and deductions. Two main types of returns must be made under RTI:
- Full Payment Submission (FPS):
The FPS must be sent to HMRC on or before the date employees are paid. This submission details the pay and deductions made from each employee’s salary, and it’s crucial that HMRC receives it before payment is made. - Employer Payment Summary (EPS):
The EPS is a monthly return that is required in specific circumstances, such as when no employees were paid during a tax month, or when an employer needs to recover statutory payments (e.g., maternity or paternity pay). The EPS must reach HMRC by the 19th of the month to be offset against the previous month’s payroll deductions.
Payments to HMRC
RTI provides HMRC with real-time knowledge of the PAYE and National Insurance Contributions (NIC) you owe. This means HMRC will expect monthly or quarterly payments based on the information submitted through your FPS and EPS. It’s crucial to ensure that all amounts due are paid on time to avoid penalties.
Year-End Procedures
At the end of each tax year, a final FPS or EPS must be submitted to HMRC, confirming that all payments and deductions have been properly reported throughout the year.
Common Challenges for Employers
Wages:
Under RTI, you cannot process wages retrospectively, such as by paying a lump sum at the year-end and assuming it has been spread over the year. Wages should be paid regularly, and the details reported to HMRC on time.
Payments that are Impractical to Report ‘On or Before’:
In some cases, such as when payments vary depending on work completed, it may not be practical to report in real time. HMRC allows up to seven days for reporting in specific circumstances, but it’s important to understand the regulations around this to avoid penalties.
Penalties for Non-Compliance
Failing to meet your RTI obligations can result in penalties. Late filing penalties range from £100 to £400 per month, depending on the number of employees in your PAYE scheme:
- 1-9 employees: £100
- 10-49 employees: £200
- 50-249 employees: £300
- 250+ employees: £400
HMRC applies penalties on a risk-assessed basis, meaning they may take a more lenient approach for occasional or minor defaults, but repeated failures will attract penalties. Daily interest is also charged on unpaid amounts, and late payments may result in penalties of 1% to 4% of the amount due.
How We Can Help
Managing payroll under RTI can be time-consuming and complex. We are here to help you navigate these challenges. We can assist with:
- Ensuring your payroll processes are compliant with RTI requirements
- Offering advice on handling complex payroll situations
- Submitting your FPS and EPS accurately and on time
- Managing your entire payroll process, so you can focus on running your business
If you need support with your payroll or any other aspect of RTI compliance, our expert team is ready to help. Contact us today to find out how we can assist your business.