is always operating in arrears, because at no time during the tax year does HMRC know anything about employee earnings. How will RTI work? Instead of supplying information once a year after the end of the tax year, employers will need to provide information to HMRC every time an employee is paid, whether that is weekly, fortnightly, 4-weekly, monthly or payments at any other frequency available. Every time a payroll is run, the payroll software will collect the information required by HMRC and send it using the BACS facility, Government Gateway or internet channel. With BACS, RTI information will be sent to HMRC at the same time as their net pay instruction is made for employees. What are the benefits of RTI? No year end payroll returns are required as employers will submit the information progressively throughout the year. Employers will need to continue to produce P60 forms. It should reduce the frequency and size of under and over payments of both tax and tax credits.
Currently where an employer takes on a new starter without a form P45, the employer must complete a form P46 and send it online to HMRC. Under RTI the P46 form will no longer exist but an employer will still have to ask a set of questions similar to those on P46 and these details will be submitted via RTI when a new employee starts work. It should result in more accurate student loan deductions. What should you be doing now to prepare for RTI? Although April 2013 may seem some way off, there are things that employers can do now to prepare for the introduction of RTI. Carol Flockhart advises,“Check that the information you hold on employees is accurate. The quality of the data submitted will be key to the success of RTI. It is crucial that all employers provide four pieces of key information on each employee – full name, actual date of birth, gender and National Insurance number.
implementation. The last thing you want is to have any last minute system issues and find yourself in a queue with other employers waiting to upgrade their system. Ask your payroll adviser for help and support on what you need to do to mitigate against the change. Your accountant or payroll bureau should be fully up to speed on RTI and what you need to do, to be prepared.” For more information on RTI or on any payroll matter the Chiene + Tait payroll team is ready to assist. Please contact Neil Cameron, Payroll Manager or Carol Flockhart, Partner by email payroll@ chiene.co.uk or call 0131 558 5800. Free information on Chiene + Tait payroll services can be found at www.chiene.co.uk
Speak to your payroll software provider to ensure your software is up to date pre RTI
February/March 2012
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