What is RTI?
Using RTI, employers and pension providers will tell HM Revenue & Customs (HMRC) about tax, National Insurance contributions (NICs) and other deductions when or before the payments are made, instead of waiting until after the end of the tax year.
- Make the PAYE process simpler and less burdensome for employers and HMRC for example, by removing the need for the end of year return (forms P35 and P14) and simplifying the employee starting and leaving processes
- Make PAYE more accurate for individuals, over time reducing the number of bills and repayments sent after the end of the tax year
- Enable HMRC to pursue late payments more effectively
- Support the payment of Universal Credit
- Reduce Tax Credits error and fraud
Employers and pension providers will send this information to HMRC online for payments made to all their employees, including those paid below the National Insurance Lower Earnings Limit (LEL).
Does RTI apply to the self-employed?
No - it is for the operation of PAYE only.
Will forms P35, P14 and P38A be needed after joining and using RTI?
No - end of year returns (forms P35 and P14) or P38A supplementary return will not be needed as employers will tell HMRC about all payments made during the tax year each time their payroll is run.
Why does an FPS include the hours worked?
The hours worked is required for the purposes of calculating Tax Credit payments.
How soon after the Employer Alignment Submission (EAS) will the employer be permitted to send in their first RTI submission?
Once the EAS has been successfully submitted the employer is considered to have joined RTI. The EAS should be submitted at least 24 hours before the first FPS.
How will HMRC treat statutory payments shown on an Employer Payment Summary (EPS)?
If you have claimed an advance of statutory payments then the amount you report on an EPS will be set off against the PAYE due as reported on an FPS. If a credit remains this will be set-off against any advance you have claimed, and any remaining credit will be used against any other amount due, or if nothing is due you can contact HMRC and claim a repayment or reallocation.
Will I have to make a submission even if I haven't paid anyone?
If you are registered with HMRC as an employer who pays HMRC quarterly, we will know to expect quarterly payments from you without you needing to do anything further.
All employers need to send an FPS every time they pay their employees, whether they pay HMRC monthly or quarterly. If you haven't made any payments to any employees in a tax month, you should send HMRC an EPS showing 'No payment due as no employees or subcontractors paid in this pay period' within 14 days following the end of the tax month. This also applies to employers who pay HMRC on a quarterly basis - if you do not, then HMRC will specify an amount due for that month, and pursue this at the end of the relevant quarter.
Can I advise HMRC that I am not going to have any employees for a specified period?
Yes. You can submit one EPS to advise us of your 'period of inactivity'. HMRC will not expect any other return, nor any payment, for the period(s) reported.
How will the system cope with an employee who resigns and is rehired in the same month with two corresponding payslips (two separate contracts)?
The system will count the two employments as separate by operating on the information submitted by the employer. The last payment from the first employment should have a date of leaving.
The first payment from the new employment should include the starting information including start date and should not take into account pay and tax information from the previous contract of employment when calculating the year to date figures. If the employer is using payroll IDs they must ensure the second contract is set up using a different payroll ID, i.e. employee number.
When will I be expected to report PAYE in real time?
Employers and pension providers will be required to report PAYE information (via an FPS or EPS) in real time 'on or before' payment is made to employees or pensioners for the vast majority of payments that they make.
What would happen if an individual had five positions with the same organisation (for example) and ceases four but keeps one of these positions? How should this be reported?
Assuming that the five positions are treated as separate employments and tax and National Insurance are calculated separately for each employment, as each finishes a leaving date should be sent as part of the relevant FPS. HMRC will, if necessary, issue a code each time.
If the earnings from all five jobs are accumulated and tax and National Insurance are calculated as one employment (i.e. there is one tax code in operation) no additional action needs to be taken until the last employment ceases.
Reclaiming tax in previous tax years - can you clarify the use of Earlier Year Updates (EYUs) against the FPS for a previous tax year? What would you expect for reclaims greater than two years? For six years following implementation will we still need to do P14 submittals for the non-RTI years which can be claimed on?
The EYU is needed to correct details of previous RTI years - you will only be able to use it for the tax years where you were required to operate PAYE using RTI. An FPS can only be sent up until 19th April following the end of a tax year - after this any corrections need to be made on an EYU.
Non-RTI years will still be corrected via amended P35/P14s as per the existing PAYE arrangement.
Reclaiming overpayment of tax - will we still need to do adjustments for previous years at the end of each tax year or can this be done throughout the year? Each time we do a mini adjustment to the employee, how are we reclaiming the tax?
Adjustments can be made throughout the year with the final FPS showing the correct Year-To-Date (YTD) figures. If adjustments relate to previous RTI tax years then the EYU is needed to show the correct details.
I have claimed 'CIS deductions suffered' on my EPS. Can I have a refund of any excess?
Yes you can have a refund at the year end, and if there are no outstanding debts.
Date of leaving. What date should be entered on the FPS?
The date to enter is the date the employment ended. The exact date of this is for the employer to decide.
What will not change using RTI?
The following will remain unchanged:
- PAYE - PAYE remains the same using RTI. It is only the reporting that changes.
- Coding notices - using RTI employers will still be able to choose how they receive coding notices; as they do now.
- Reporting a change to HMRC e.g. updating employee's new name or addresses for HMRC records - an RTI submission will not update HMRC records. It remains the responsibility of the individual employee to notify HMRC of changes of name, address, etc.
- HMRC messages to employers using RTI - HMRC will continue to use the Data Provisioning Service (DPS) and EDI outbound message services.
- Payment dates using RTI - payment dates to HMRC will remain the same using RTI.
- Forms P60 - P60s will remain using RTI.
- Forms P11D - HMRC are not planning to change the requirement to complete a deductions working sheet (or electronic equivalent)
Will RTI change the Construction Industry Scheme (CIS) payment and reporting process?
RTI is not changing the existing CIS process. Employers will continue to complete and file monthly returns due under the existing CIS arrangements.
How do I deal with the fact that I don’t have a National Insurance number?
Evolution will allow for the National Insurance number field to be left blank if the National Insurance number is not known, but you must provide the employee's address. However where possible, you should ensure that you obtain the correct National Insurance number for your payroll records.
Is a default date of birth, (01.01.1901), in such scenarios is still acceptable?
You should not use a default date of birth. You should make every effort to obtain the correct date of birth for the individual, especially for new pensions coming into payment. Where, despite these efforts, it's not been possible to obtain the correct details, please continue to use the date of birth currently held on the payroll.
What guarantees can HMRC provide about the accuracy of National Insurance number information that they will send to providers?
HMRC will attempt to validate National Insurance numbers provided by checking with the DWP. In cases where there is a discrepancy, or where the employer has not provided a National Insurance number, HMRC will inform the employer.
If the annuitant (a person who is entitled to receive benefits from an annuity) queries the National Insurance number provided by HMRC, the annuitant should contact HMRC to resolve the query.
The more accurate and comprehensive employee data the employer gathers and maintains, the more likely it is that the National Insurance number provided will be correct.
Whilst employers and pension providers may request sight of a passport occasionally to verify age, do I now need to request to see the passport number?
The passport number will only have to be provided if the employer or pension provider collect it as part of their checks that the employee or pension recipient is entitled to work in the UK or receive a UK based pension.
Why is it important to check the details I hold about my employees are accurate?
It has always been important to make sure the information that you send HMRC about your employees is accurate to help ensure that your employees pay the correct Income Tax and NICs. Improving the accuracy of the information you hold and send to HMRC will help match the information to the correct HMRC record. This could save you money by helping to reduce the number of employee enquiries you receive.
This is not just important for tax and NICs. From October 2013, RTI will support Universal Credit by providing the DWP (Department for Work and Pensions, formerly the Benefits Agency) with up to date information about claimants' employment income. Ensuring your employee information is correct will help to ensure they receive the right amount of credit.
As part of the process for an employer joining RTI, HMRC will align the records of employees held on the NPS system (National Insurance and PAYE Service, is a single national computer system introduced by HMRC in July to replace the 12 regional databases that previously handled PAYE processing) and the records held by employers.
In the meantime HMRC recommends that you start to prepare for RTI by checking the information you hold.
How does RTI affect me as an individual?
Generally, employees probably won't see much, if any, difference in their working day. However, using RTI, employers and pension providers will need to ensure that their employee records are up to date. They will also send information to HMRC when or before they pay their employees. This better quality, more up-to-date information will mean that, over time, more people will pay the correct tax in-year.
HMRC will also have the RTI needed to support the introduction of the DWP's Universal Credit in October 2013. Universal Credit will need up to date information about employment and pension income from RTI so that the DWP can adjust claimants' welfare payments to reflect their circumstances.
How does RTI support the payment of Universal Credit?
RTI will support Universal Credit when it is introduced by providing DWP with up to date information about claimants' employment income.
What happens if I leave my job?
Using RTI employers will still give leaving employees a form P45 showing their pay and the tax deducted.
What happens if I start a new job?
Using RTI employees still need to give their new employer the form P45 given to them by their previous employer so they can operate the correct tax code. Employees will also need to answer some new starter questions. Getting this information right is paramount as it will help make sure the employee pays right amount of tax is paid, and receives correct amount of credit for the NICs they pay.
What happens if I don't have a P45?
This has not changed. The employer will ask employee some new starter questions similar to completing a form P46 so they are able to operate the correct tax code.
What additional information does the employee need to give to the employer?
Using RTI there is little change to the information given to your employer. To help get employee’s tax right and make sure they get credit for the NICs that they pay, they should provide:
- National Insurance number shown on the card or letter issued by the DWP. A National Insurance number consists of two letters followed by six numbers, followed by one letter - A, B, C or D.
- Full formal name (surname and forename) must be obtained. It is important that full forename and not just the initials (for example, John Smith and not J Smith), are provided by employees.
- Date of birth
The employer needs to verify the above information from an official source, such as employee’s birth certificate, passport, driving licence or official documents from HMRC or the DWP.