Small Businesses Must Prepare For Real Time Information (RTI) In 2013

RTI is a new system introduced for the employers and pension providers by HM Revenue and Customs to report pay, tax, national insurance contribution and other details each time the payroll is processed weekly, fortnightly or monthly. From April 2013, it will be mandatory for all employers with less than 5000 employees to make RTI submissions online with large employer migrating to the system before October 2013. Previously, all employers were required to submit a P35 or P14 at the end of the tax year. With the introduction of RTI submissions being sent each pay period, HMRC will no longer require this end of year information after the 12/13 year end and can instead keep track of all legislative processes in ‘real time’. Although P35 and P14 forms are being replaced by your RTI submissions, P60 forms are still required to employees at the end of each tax year as well as P11 forms.

HMRC have identified certain information about employees that is critical to RTI. An employer will not be able to make RTI submissions to HMRC without providing the employee’s surname, forename, gender, date of birth and working hours. The address is also mandatory for new starters but not existing employees. The employee’ NI number is desirable, however not knowing the NI number for some of your employees will not prevent submission to HMRC. With regard to company data, the employers have to make sure the district number, PAYE reference number and PAYE account office reference number are correct.

Your payroll system will need to be upgraded with all the requisite data items and the ability to produce cross reference and hashes to accompany both the RTI submission and the payment itself. You need to liaise with your payroll software provider and ensure they understand the timescales and expectation for the upgrade since the employer will be mandated to comply with RTI submission and penalised by failing to do so. You also need to liaise with your payments provider and ensure they have an RTI compliant Bacs system in order to minimise the disruption.

From April 2013, RTI will become compulsory for most business. This will require monthly online submission of ‘real time’ payroll information to HMRC. Small business and limited company contractors will need to update their payroll systems to ensure they are compatible with the new RTI requirements. Belsize Accountancy offers payroll solutions to our clients. Feel free to contact us on 0207 043 0052.