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RTI – What’s it All About and How is the Regulation Changing?

There has been fierce opposition to HMRC’s plans to make mandatory a Real-Time Information system for all employers in 2013. Despite this, the government is pressing ahead, with trials beginning in 2012. Here, we explain the changes and how you can prepare for them.

So – What is ‘RTI’?

At present, employers are required to return information about pay, PAYE tax and NI annually at the end of the tax year through various online submission forms.

‘Real-Time Information’ or RTI refers to the method of submission on a regular basis. More specifically, it is the process by which employers provide such information each time they run their payroll through a computerised payroll or BACS system.

HMRC’s plans mean this must be carried out within a matter of days following the end of the payment month.

Why Change the Current System?

In short, HMRC will receive the information much faster, and will be able to collect more accurate data. It also means agents will be submitting data throughout the tax year in a staggered fashion, which will relieve the annual April bottle-neck effect. Unfortunately while this is a great advantage for HMRC and payroll agents, it could result in more laborious and time-consuming admin for employers, as well as expensive software updates and training.

When Will the Changes Come into Effect?

Some businesses have volunteered to trial the system between April 2012 and April 2013. HMRC will phase introduction of the Real-Time Information systems between April and October 2013, when it will become mandatory for all employers to use the scheme when reporting PAYE Tax and NI.

At present there are no indications of charges to be incurred if the deadline for integration with employers’ systems is not met, although we would anticipate there being some penalties announced nearer to the launch date.

What Can I Do to Prepare?

If you currently do not use a computerised payroll you will need to input the data manually for each employee on the HMRC website. Depending on the size of your business, this could be a burden on your time. We would suggest computerising your payroll and switching to payment by BACS.

If you currently use a software package to complete your payroll administration the switch-over will be easier, although possibly costly. You could be in line for increased monthly software subscription charges, expensive updates and down-time due to staff re-training. If you are concerned about how to integrate the new RTI systems with your own we’d be happy to chat through your options and develop a cost-effective plan with you. We can also help to retrain your staff to deal with the software changes.

If you currently use our Payroll team to carry out your administration, there’s no need to do anything. Our systems are automatically updated with the latest software. We’ll keep you up-to-date with any changes which affect your staff and your business.

At McLintocks we provide a wide range of Payroll services, from advice on the right software and help setting up your systems, to delivering total Payroll solutions for your business, meaning you can rest assured that your staff are being well looked after by our Payroll specialists. We can also advise you on other aspects of Human Resources, including flexible benefit packages, personnel record guidance, contracts of employment, dividend/salary decisions, company car policies etc…

If you’d like to know more about how the changes in Real-Time Information will affect your business, or you need advice on Payroll or HR issues, please call Jeanette or Annie – our Payroll experts – on 01244 683 783.