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Real Time Information: let the countdown begin…
With 2013 well underway, time is running out for employers and their businesses to prepare for the introduction of Real Time Information (RTI).
So what does it mean for me as an employer?
From April 2013, employers must report to HM Revenue & Customs on their employees’ tax, national insurance contributions and other deductions when or before their wages and salaries are paid.
Employers will need to send their first return – called a Full Payment Submission (FPS) – for salary or wage payments made to employees on or after 6 April 2013. Employers with 250 or more employees will also have to have to send an Employer Alignment Submission before their first FPS.
Providing this Real Time Information requires the use of specific software and relies on employers having accurate employee data.
Why must I as an employer act now?…….because time is running out!
Being able to comply with the RTI requirements takes preparation and employers cannot leave this to the last minute.
- There is a change in what, when and how data must be filed.
- Data must be accurate and complete. Information gaps, such as dates of birth or full first names, must be filling in. RTI data will be required even for employees being paid below the national insurance lower earnings limit.
- There are technical implications, specifically whether your existing payroll software will be RTI-compliant.
The software issue – are you compliant?
The software implications of RTI compliance are substantial. Not all current products are being updated by their developers; those that are not will need to be replaced, with inevitable associated costs. Employers need to choose their new, RTI-enabled payroll software carefully to make sure it is appropriate for business as well as RTI needs, as well as being cost-effective.
Some employers may decide that this could be an appropriate time to switch to using a payroll bureau – such as McLintocks who are RTI complaint.
Other issues – Do your staff need training?
In order to achieve a smooth transition to RTI, payroll staff will need specific training on new processes and software. Demands on payroll staff will increase substantially under RTI, due to the strict filing deadlines. Understanding how to deal with particular complexities such as the reporting of cash payments to staff working in the leisure and retail trade will be important.
Other staff may also require training, such as personnel involved in recruitment who will need to gather necessary RTI data from new joiners. All employees will need to be made aware of the introduction of RTI, the potential impact on their pay (given that PAYE adjustments could be made throughout the year), and the importance of keeping their employer and HMRC up-to-date with any relevant changes in circumstance (such as marriage).
Your call to action from HMRC
Ruth Owen, HMRC’s Director of General Personal Tax, recently highlighted the need for thorough preparation, warning: “There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the lower earnings limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”
You face penalties if you fail to comply!
HMRC has announced that it will not charge penalties for late FPSs this year, nor will there be automated late payment penalties until April 2014. However, penalties may apply for the tax year 2013/14 if HMRC discovers inaccuracies on FPSs.
Making careful and thorough preparations in advance of the April 2013 starting gun is the best way for employers to minimise their risks of incurring any RTI-related penalties.
Know where to get compliant
McLintocks Payroll Solutions Team are RTI-compliant and will enable the submission of the RTI cross-reference in your payroll submission to Bacs. We ensure that your staff’s wages gets to the right place, at the right time, in the most cost-effective way whilst ensuring you are compliant with the legislation to avoid potential penalties.
How can we help now to ensure your business is prepared for these RTI Law changes?
The main question asked of us by employers is “What does my business have to do now?”
We will help to ensure that you are not underprepared by helping:
- Data Cleanse – submit employee data to HMRC before RTI is live so HMRC can correct inaccurate or incomplete data
- Improve and Maintain Data Quality – Make sure you obtain dates of birth, use full names and include addresses when employees are entered on your payroll
- Our Payroll Software is RTI compliant – We can deliver on Real Time Information
- Banking – Our BACS facility is ready for RTI
For a no obligation chat with our Payroll Specialists, please call 0845 680 700.
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