This revolutionary development in the PAYE system will involve many fundamental changes. If you do your own payroll you need to be up to speed with what RTI is all about.
For every occasion that an employee is paid, the details must be reported to HMRC. The idea is that it will make it much easier to ensure the right amount of tax and national insurance is paid at the right time. This in turn will reduce the need for end-of-tax-year reconciliations.
Cynics argue that the new system is coming in so that the new universal credit benefit system (due in October 2013) will work from up-to-date earnings information. RTI should give cost savings to employers in due course, but there will be initial costs of switching to the new scheme. Payrolls for domestic staff will no longer be able to use a simplified scheme, meaning extra complications. Moreover, an employee paid less than the lower earnings level (so no NICs) must have their earnings reported, unlike under the current system.
Savings in completing forms will arise, as no annual form P35 or P14s will be needed, but forms P60 and P11D will still be with us.
All employers will have to switch to RTI by October 2013, but most will be able to do so by April 2013. Now is the time to address the issue by reference to your own circumstances, unless we handle your entire payroll for you. If you are what the EU calls a “micro employer”, meaning that you have less than 10 staff, you will have to use RTI without any concessions to reflect the number of employees in the business.
Please contact us for full assistance.