After a significant period of development HMRC introduced an important new system for payroll processing which you will know as real time information – or RTI. From 6th April 2013 all employers have been required to report PAYE information in real time.
All employers have to:
- send details to HMRC every time they pay an employee, at the time they pay them
- use payroll software to send the details electronically as part of their routine payroll process
Reporting PAYE in real time is mandatory. It allows HMRC to work out how much employers should be paying to HMRC each month. It also helps employers to pay the right amount and keep their PAYE account up-to-date.
The significance of good, accurate data in the successful operation of RTI cannot be overstated. The collective RTI submission fails due to a lack of just one piece of mandatory information for one employee and continued failure to make weekly submissions will lead to penalties. This represents an important step change for Accountants working in the entertainment industries, who are tasked with collecting information from a diverse and transient group of employees.
Employee Starting Information
For each employee you must provide the following (items on the lists below marked * are mandatory):
- National insurance number – this must consist of two letters, six numbers followed by one letter (for example, QQ123456A). Do not enter a temporary number. If the employee has left your employment, leave this field blank and make sure the other mandatory fields are completed.
- Surname or family name*
- Forename or given name – if you don’t know the employee’s full forename(s) put their initial(s) in the ‘initials’ field. Don’t use familiar names or nicknames (for example use David instead of Dave, Elizabeth instead of Betty).
- Initials * – Forename or initials must be completed.
- Second forename or given name
- Date of birth* – enter the date and month as well as all four numbers of the year your employee was born.
- Current gender*
- Address* – the address must be completed if you don’t know the employee’s National Insurance number or you have left that field blank.
- UK postcode
- Foreign country
- Starting date* – you will need to send details where the employee has started work for you in the current tax year.
- Hours Worked* – There are four categories:
- A) 0 to 15.99 hours
- B) 16 to 29.99 hours
- C) 30 hours and Over
- D) Other
- Starting declaration* – You must obtain a starting declaration from every employee. These are similar to the old P46 statements. Starters presenting a P45 are still required to complete a starting declaration. The Statements are:
- This is their first job since last 6 April and they have not been receiving taxable jobseeker’s allowance, employment and support allowance, taxable incapacity benefit, state pension or occupational pension.
- This is their only job, but since last 6 April they have had another job, or have received taxable jobseeker’s allowance, employment and support allowance or taxable incapacity benefit. They do not receive state or occupational pension.
- They have another job or receive a state or occupational pension.
If you do not receive a starting declaration then you must assume statement “C” and apply the tax code “0T” on a week 1/month 1 basis
- Student loan – You must also ask your new employee to confirm if they left a course of UK higher education before last 6 April and received their first student loan instalment on or after 1 September 1998. You also need to find out if they have not fully repaid their student loan (but you don’t need to know about loans being repaid by agreement with the UK student loans company by monthly direct debit from a bank or building society account).
- Irregular payment pattern indicator – indicate where your employee is paid on an irregular basis.
- Leaving date – you will need to send details where the employee has left your employment in the current tax year.
- Tax code* – the tax code you will use when you next pay the employee or, in the case of a leaver, the tax code you used on their last normal pay day.
- Tax code basis – whether you are or were, in the case of a leaver, operating the tax code on a non-cumulative basis, week 1 or month 1.
The submissions you will need to make in the RTI cycle:
Employer Alignment Submission – EAS
You must submit an EAS if you’re a large employer or you have a complex payroll system; you must submit your employee records in an EAS before you submit your first full payment submission (FPS).
You submit an EAS if:
- you have a large PAYE scheme with over 250 employees
- your PAYE scheme is ‘split’ because you have different payroll providers, two or more payroll systems (for example monthly and weekly) or you can’t make a single FPS submission because of bandwidth restrictions
If neither of these applies you submit your employee records for payroll alignment when you send your first FPS, although you can choose to submit a separate EAS if you wish. You can only submit an EAS once and it can’t be amended once it’s submitted. Employers operating ‘split’ PAYE schemes will be able to submit an EAS in parts from April 2013.
Full Payment Submission – FPS
You must send details of new employees to HMRC when you make your first payment to them. You do this by including them on the first full payment submission (FPS) you make which includes the first payment to your new employee.
You can set up new employees on your payroll before you make your first payment to them once you have gathered all the information above but you only have to report their details when you first pay them.
You must submit a full payment submission (FPS) each time you make a payment to an employee. The final FPS for an employee should be sent on or before their last pay day in the tax year and will be used to update individuals’ tax, contributions and student loan deduction records.
Employer Payment Summary – EPS
If no payments to employees are made within a pay period, or you want to recover statutory payments, construction industry scheme (CIS) deductions suffered or NICs Holiday, you must send an EPS. If this is your first EPS since starting to send PAYE information in real time you must include the year to date figures for any recovered payments in the same tax year, and this first EPS must be sent when you’ve sent your first FPS or by the 19th of the following month.
National Insurance Number Verification Request – NVR
Use this routine to verify or obtain a national insurance number for new employees. When you send HMRC a request via your payroll you will receive a reply which you can view through PAYE Online, which will tell you if the number is right or not, or will provide a number if you haven’t got one.
The following is a link to the HMRC RTI website which provides a lot of detail on the subject of RTI:-