As most of you are well aware, from April 2013 most businesses will be required to send to HMRC details of the amounts they pay their employees on or before the date the payments are made. HMRC call the process Real Time Information (RTI) and this radical change, the first of its kind to affect the PAYE system since 1944, will cease the need for the submitting of the P35 and other documents, at the end of the tax year.
So why are HMRC implementing the change and what does it mean to you as a business owner? There is now a single integrated real-time process replacing the separate end of year, P45/P46 and payment processes – meaning in theory, it should reduce the time spent processing payments. This reduces the burden on employers while giving better tax and benefit administration arising from the real time in-year information which will now be available to the Government. It is hoped that RTI will also be an improved taxpayer and employer experience.
There is a multitude of tasks that must be completed before 6 April 2013; these can be seen by visiting the HMRC website.
You will also need to submit a variety of payroll summaries every time you make a payment to an employee, make adjustments to previous returns or adjust employee’s details from the 6th April 2013 onwards. The bad news for businesses is that you not only have to report payments when made but also periods when you have made no payments. The full returns required are:
- Full Payment Submission (FPS) – sent each and every time you pay an employee
- Employer Payment Summary (EPS) – to report a reduction in the amount you pay to HMRC or if you haven’t paid any employees in a pay period.
- Employer Alignment Submission (EAS) – to align employee records with HMRC records before you submit other information.
- Earlier Year Update (EYU) – to correct, after 19 April, any of the year to date totals submitted in your final FPS for the previous tax year.
- National Insurance number Verification Request – to verify or obtain a National Insurance number for new employees.
There are of course penalties for any business that do not comply with the new changes. For the tax years 2012-13 and 2013-14 penalties will still be charged if the tax year data is not filed by 19th May following the end of each tax year. The good news is that for the first 2 years, there will be no penalties issued as businesses get used to the new process, however from 2014-15 onwards, all penalties will be applied.
If you’re a current client of Sibbalds Payroll Services, all of these changes will be handled for you, as our payroll software is compliant with RTI. If you still prepare your own payroll and have any questions about RTI, or you would like to outsource your payroll process, please get in touch, we are happy to help.
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