Are you ready for Real Time Information?
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 Peter Gomersall, of Grant Thornton’s Employer Solutions Team, Yorkshire
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REAL Time Information (RTI) is ‘on track and going well’ according to HM Revenue and Customs. With only months to go before employers need to be compliant with a whole new payroll information reporting regime, Peter Gomersall of Grant Thornton’s Employer Solutions team in Yorkshire, gives the key information to ensure your plans are on track. RTI is a fundamental change to the way that all employers will be required to report their PAYE reporting, there will be no changes to the methods of PAYE withholding. Under the present PAYE system, employers and pension providers tell HMRC what deductions they have made from employees’ and pensioners’ pay at the end of the year. This means that HMRC doesnot know whether people have paid the right tax until the next tax year. Switching to RTI means that all employers and pension providers will tell HMRC about tax, NICs and other deductions at the point they run their payroll rather than at the end of the year. RTI is being introduced for four main reasons: – HMRC believes that the current PAYE system is antiquated (it has been in place since 1944!); When will RTI be introduced? RTI will be phased in for all employers from April 2013 to October 2013 by which time it is expected that all employers will have adopted and be working under RTI. There are a number of ‘early adopter’ employers who have been trialling RTI on a voluntary basis from April 2012 onwards. HMRC is still seeking employers to join the trial in November, which, by that time, it is hoped will give a total of up to 250,000 volunteers. Additional data submissions under RTI Under RTI, HMRC may request up to 106 individual pieces of information. It is likely, however, that employers will not be required to provide the full 106 pieces of information, but there are some interesting additional pieces that HMRC may request:: – Income subject to Class 1NIC but not PAYE; How will the data be submitted? RTI reporting will be embedded into normal payroll activity with employer returns integrated into payroll software. Technically, every time that an employer runs a payroll, the payroll software should automatically gather the information about employees’ and pensioners’ tax deduction that HMRC requires. It should then send this information to HMRC at the same time a payment is made. To start with, the RTI data will be submitted using existing HMRC filing channels: the Government Gateway or via Electronic Data Interchange, however, longer term the aim is for employers to submit this data through the Government Gateway only. Main changes to payroll under RTI Employers will be required to submit an RTI return each time they make a payment rather than waiting until the end of the tax year. As HMRC will be receiving information on employees more frequently, employers will no longer have to send an end of year return(P35,P14 and P38A) to HMRC. Main items staying the same under RTI The basics of the PAYE system – such as deductions from payments to employees and the frequency of the payments to HMRC of PAYE income tax and NICs – will stay the same. In addition, employers will still have to: – provide each employee with a P60; Next steps It is essential that employers start to prepare for RTI now by talking to their payroll providers to see how they are developing the necessary software and to ensure all of their employment taxes processes and controls are in place so that the correct information is sent to HMRC and that the correct income tax and NIC treatment is being applied to each payment. HMRC will be receiving details of the tax and NIC treatment being applied to payments in real time, and where any mistakes are identified, they will be looking to impose punitive penalties under the new in year PAYE penalty regime. Clearly, an incentive to make sure the employment tax process and controls are correct and in place! For expert advice about how to ensure that you are compliant with RTI, contact Peter Gomersall of the Grant Thornton Employer Solutions team on (0113) 200 1548
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