Update on HMRC RTi payroll with effect from 06. April 2013

RTi – Real Time Information; changes to the way we operate payrolls

You will all be aware by now of the changes to the payroll system that take affect from 06. April 2013.
If you employ staff you must comply with the new regulations. The exception to this rule is only if all of your
employees earn less than the lower earnings limit (LEL) they will not be required to be included in a full RTi
scheme. However the rider to this is that if you have just one employee who earns the same or more than the
LEL (£109.00 per week) then it is a case of 1 in: all in!
Essentially if we are running your payroll you will not notice much of a change.
The current requirement is that all employers are required to submit an annual return. Under RTi the employers
return (FPS or Full Payment Submission) is required to be submitted each time a payroll is run.
Currently, the tax and NIC due is payable by the 19th of the month following. This will not change. It was
muted that it would be collected by direct debit. This is not the case. You will still be expected to make
payments on time when due. The added incentive is that there will be penalties for late payment!
If we run your payroll we will probably have most of the information required but there will be a requirement
for more detail.
The basis of RTi is driven by the information required as base data for the payment of benefits and demands
accurate and timely information.
Because of that requirement we will need for each employee the following -
Full Name, – initials are insufficient.
National insurance number
Date of birth
Home address, including post code
Tax code
Hours worked: – we will require for each employee – the basic contracted hours and the hours actually paid each
week.
Details of Sick leave or annual leave must also be disclosed separately
There are a number of details as to the required reporting of the variables of the payroll but we would ask that
you contact us to discuss each case as we do not want this notification to get unduly lengthy. In other words if
your payroll is a bit different from the norm; give us a call.
The critical requirement of RTi is that of ‘on or before ‘. This means that you must make a Full Payment
Submission before a payment of earnings is made to an employee! I.e. on or before you pay them!
Most of you will already be doing this i.e. we run your payroll send you the payslips and you will pay your
staff!
However in some cases we run monthly payrolls but the employee is paid a regular sum each week. This can no
longer continue. If your employee needs to be paid weekly we must switch you to a weekly payroll and make
the appropriate submission before the payment is made.
Because the FPS is made each time a payroll is run the amount of tax and NIC that is due by the following 19th
April is already submitted.
Hence the fact that HMRC will know what is due they will calculate the penalty based upon an accurate figure.
For those of you that suffer CIS tax at source, this will be offset and submitted monthly on the Employer
Payment Summary (EPS) which is submitted after the FPS has been submitted but before the payment is due on
the 19th of the following month.
There will be ad hoc payments required outside of the regular payroll such as a new starter missed off the
payroll data, an overtime payment is missed off the payroll or perhaps an ad hoc payment on account of
earnings.
A loan is not subject to PAYE and does not needed be reported to HMRC; however please note that there is a
distinction between a genuine loan and an advance of pay!
Please discuss any nonstandard payment with us before you make the payment.
There are certain rules for Directors loan accounts and other such expenses. Again please discuss these types of
payments with us so that we can ensure as much as possible that you are fully compliant.
Because of the nature of the required accuracy of submission s to HMRC you will be required to authorise us to
submit the return on your behalf as we do with Tax returns and final Accounts and of course we have done in
the past with the annual P35 return.
A letter of engagement will be sent to you shortly setting out what is required of you and what we undertake to
do on your behalf for the avoidance of doubt. This will become critical when HMRC start issuing penalties from
April 2014.
We are aware that there are some last minutes amendments to assist small businesses but as yet they have not
been agreed or published. We will advise you of this as we hear ourselves.
There is an increasing need to have more contact with clients for updates on taxation and the law in the future
and to that end we will shortly be sending you details of our Facebook page which has a link to our new website
where we can notify you of updates on a regular basis.
Please, please, if you need further information contact us to discuss your individual circumstances.
Many thanks
Roy Smart FCCA

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