Employers: RTI & Penalty Update

RTI stands for Real Time Information and is HMRC’s latest initiative to ensure employers’ returns for PAYE and NI are made on a monthly basis in electronic form, rather than simply at year-end on the P35 as is currently practice.

Many people have assumed that RTI is just a new function for their payroll software, and the next update will provide the solution. This is not the case for every employer, as certain long-established payroll products are not going to be upgraded for RTI. For example the HMRC free ‘Online and return and forms PAYE service’ will not have RTI functions added. However, the HMRC ‘Basic PAYE tools’ software will be RTI compliant, but it can only be used for up to nine employees per PAYE scheme!

All small and medium sized employers will be expected to start using RTI to submit payroll data from April 2013, unless they have agreed a different start date with the Tax Office. Once the employer receives an ‘invitation’ from HMRC to use RTI they must join the RTI system from the date directed.

Employers will need to collect some new data items for RTI which are not currently required for PAYE reporting, such as:

• Hours worked by each employee as they fall into one of four bands;
• Details of employees earning less than lower earnings limit;
• Which employees are paid irregularly, perhaps only once per year; and
• Passport numbers for employees who do not have NI numbers.

In addition the employer must check they have the correct NI number (where this exists), date of birth, gender, full given name and address for each employee.

HMRC are also rationalising the number of PAYE schemes in preparation for RTI, so they are closing down all PAYE schemes which have been inactive for a while resulting in the closure of some PAYE schemes which are only used once a year for one-man companies.



HMRC have confirmed that there will be no automated penalties for late RTI returns until April 2014, however errors will be penalised from next April (2013) and the real-time system will be used for collecting these.

Many employers, whilst aware of the impending implementation of RTI, still seem largely unaware of the dramatic effect the new regime will have on their reporting requirements and this, together with the new Pensions Auto Enrollment will see a significant increase in the administrative burden placed on employers over the coming year or so.

For more information of RTI, Auto-Enrollment or payroll assistance generally contact our Payroll Team on 0845 177 5500 or contact us online

the new RTI regime is still developing (even at this late stage) and we will blog in more detail in the New Year about specific actions needed by all employers to comply. This is a complicated area and despite HMRC’s assurances of a light-touch approach Professional advice should be taken if you are in any doubts about your responsibilities, contact our Payroll Team on 0845 177 5500 or contact us online

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