Small Businesses Must Prepare For RTI Effective April 2013

The HMRC will launch the new Real Time Information (RTI) System, effective from April 2013. Research has found that many small businesses are not adequately prepared for the new rules which will require changes to their current payroll systems. Most employers and pension providers will be legally required to submit PAYE information in real time from April 2013 and all employers must do so by October 2013.

The new RTI rules require all employers to make online submissions to HMRC to provide additional information about payments to employees, tax, National Insurance and other deductions. The new system will mean that HMRC and the Department for Work and Pensions (DWP) will have up to date information about employee’s incomes meaning that the HMRC tax coding is more likely to be up to date and that employees may no longer have to wait till the end of the tax year before it is established that an adjustment is required to their tax return.

RTI will require employee payroll details to be correctly entered onto the monthly submissions to HMRC in order for the system to work effectively. RTI submissions must match the information held by the HMRC including the full names of employees, their Dates of Birth and National Insurance numbers. The introduction of RTI means that P35’s and P14’s will no longer be required.

Small businesses must ensure that their payroll software is compatible with RTI and will enable the relevant PAYE information to be submitted electronically to HMRC. If you require assistance with RTI or would like to outsource your payroll, feel free to contact Belsize Accountancy on 0207 043 0052 or submit your request to RTI@BelsizeAccountancy.co.uk.

The new RTI legislation will apply to all businesses including small businesses and individual contractors. You are advised to act now in preparation for the change.