RTI or Real Time Information

The Revenue will introduce RTI from this coming April.  It is the biggest change in PAYE for some 70 years and it has an impact on nearly all companies and all employers.

 

What is RTI

RTI is a new way of reporting information to HMRC about tax and other deductions and about starters and leavers every time employees are paid rather than submitting this information at the end of the year.

 

The benefits as we see them :-

  • People with multiple employments or multiple pensions will pay the right amount of tax as the revenue will tie all payments up on a monthly basis and so hopefully large under or overpayments of tax will become a thing of the past.
  • Tax credits can be calculated more easily again hopefully leading to less over or underpayments and so should also facilitate the new Universal credit coming in in October 2013
  • Make it simpler to still pay the right amount of tax on changing jobs and so on
  • Cut HMRC £1billion a year bill.

 

The disadvantages as we see them:-

  • More filing, more forms to complete, more weekly and monthly information to collate
  • Errors on payrolls will be extremely difficult to correct and advising your HR department that you took on a new person 3 months ago is out of the window.
  • Directors need to decide what to pay themselves on a monthly basis and set up a standing order accordingly as annual payments may become a thing of the past.
  • Spouses wages need to be determined in advance rather than in arrears!!
  • HMRC are aware of the employers’ liabilities and so payments for PAYE will have to be paid by 19th in order to avoid fines and penalties.

 

Data quality is paramount:-

Most of the errors made are due to data errors.  It is of paramount importance that the correct information is sent up to HMRC.

o   NI Numbers

o   Full first and last names

o   Date of birth

o   Address

o   Hours worked per week broken down into 4 categories

 

If you need us WE ARE HERE TO HELP and also there is a lot of information on the Revenue’s website at:-

http://www.hmrc.gov.uk/payerti/getting-started/index.htm

 

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