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Payroll Guides : RTI Essentials

What is RTI?

RTI stands for "Real Time Information". It is an HMRC initiative which requires employers to report every payment to employees before the payment is made. From April 2013 it will replace the current filing of starter/leaver P45/P46 documents and it also replaces year-end P35/P14 so the current PAYE year, 2012/13, will be the last year that P35/P14 is filed at year end.

HMRC has a system for checking that payroll software suppliers conform with the requirements of RTI. HMRC calls this verification process "Recognition", and we're delighted to confirm that Payroll One is amongst the first suppliers to be awarded "HMRC Recognised" status for its 2013/14 payroll software release.

A few of our clients don't have their payroll PC attached to the internet and those clients will need to rectify that before April 2013 or they'll have difficulty complying with HMRC.

Please note: RTI doesn't change anything about how PAYE and NI is calculated. Nor does it change anything about how you actually pay HMRC the PAYE and NI that your organisation owes.

Does Payroll One support RTI?

The standard download from our website supports RTI. If you are already running last year's Payroll One software you won't have to do anything special to activate the new release as the new year update will automatically be installed on your PC when you reach the end of PAYE year 2012/13.

The cost of this update is included in your normal Payroll One charges for Premium or Bureau licence. Likewise Express users will be able to download it too.

When will my business start filing RTI?

For most employers RTI will be compulsory starting with their first pay run after 5th April 2013. ie starting from the new tax year. A small number of Payroll One users have more than 250 employees, and those employers will switch to RTI in the summer or autumn of 2013.

Summary: HMRC will let you know when you should start filing RTI. In above 99% of cases this will be April 2013.

Can I join RTI early?

Our RTI pilot is working very well. We have about 300 employers filing in the RTI pilot so we aren't looking for any more pilot volunteers, and we don't see any particular benefit for our customers in them being involved in RTI earlier than next April. If you are very keen to be involved in the pilot  then please let us know your tax office, PAYE reference, and your accounts office reference that you use when paying HMRC and we'll apply for you. But we cannot guarantee that HMRC will accept you on the pilot and we have no control over their selection process.

Will it be easy to file RTI?

Yes, we have designed Payroll One to make the process of filing RTI with HMRC as easy as possible. Whenever you advance a payroll to a new period you will automatically be shown a form that prompts you to file that period's payments. All you will have to do is click a single "Submit" button on that form and the payments will be filed and the period-end process will continue. In the unlikely event that HMRC takes more than a minute or so to process the submission Payroll One will continue the period-end anyway, and Payroll One will automatically continue to monitor HMRC to check the success of the submission.

Our demo video now shows the process around an RTI submission of FPS (full payment submission). 99% of RTI submissions will be FPS's.  If you're new to Payroll One then watch the whole video, but if Payroll One is already familiar to you then start watching from about 2 minutes into the video.

What are RTI Hash Tags, and do they affect me?

RTI Hash Tags are markers on BACS payments that allow HMRC to cross reference RTI submissions with actual payments to employees. If you generate a BACS file for paying your employees Payroll One will put the RTI hash tags in it, and the matching references will be added to your RTI FPS submission to HMRC. if you pay your employees by any non-BACS method (for example cash, cheques, or most internet banking services) then RTI hash tags have no relevance to you.

You don't need to worry about hash tags. If you're paying employees using a banking method that supports hash tags Payroll One will add them to the banking payments file automatically, and they'll be reported on the FPS. You don't have to do anything extra to make that happen. And if you aren't paying your employees that way you don't need them anyway, and Payroll One won't generate them.

How will I make my monthly/quarterly payment to HMRC under RTI?

You should continue to pay HMRC exactly as you were doing before RTI was introduced. RTI doesn't affect the way you pay HMRC at all.

What will happen with P45/P46?

You will no longer have to file P45/P46 with HMRC. But paper P45s should still be issued to leavers and collected from starters. Starters who don't supply a P45 should be given a P46 to fill in, and the paper copy should be kept on file. HMRC will get all the starter and leaver information they need when you file RTI payments.

How is my filing of CIS Subcontractor deductions affected by RTI?

CIS Subcontractor deductions continue as before, with the monthly CIS300 to be filed between the 6th and 19th of the month following payments to subcontractors. Payments to subcontractors should not be reported under RTI. You should add together your RTI and CIS liability just as you currently do to arrive at your total payment for the month or quarter.

As stated above you should continue to pay HMRC exactly as you were doing before RTI was introduced. RTI doesn't affect the way you pay HMRC at all.

I am already using Payroll One. How do I get the new RTI software from you?

You don't need to do anything special. As you advance any payroll to 2013/14 Payroll One will automatically ask you if you want to update to the new release, and you should answer "Y". Your software will then be updated for you.

If for some reason you'd like to update your software manually you can do so by selecting "Help / Get Latest Release" in Payroll One, or you can simply follow the "Download Free Payroll Software" link on this site

Will Payroll One payroll processes change?

HMRC's guidance states that you should file RTI before you pay your employees. Rather than making RTI a separate process we've attached it to payroll period end since it is advisable to lock payments against further adjustment before filing them. So we recommend that you should advance your payroll to the next week or month as soon as you're happy with the payslip figures rather than waiting until you're ready to process the following period (by which time the employees would have been paid and RTI filing would be late)

Another significant change is the addition of a "starter declaration" for all new employees who start with you. Even if an employee produces a P45 they will still be required to tick box A/B/or C on a starter declaration, similar to the declaration on a P46

Should I do anything to prepare for RTI?

Yes, there are some things you can do to prepare for RTI. In fact we recommend very strongly that you do these things right now.

Enter your Accounts Office Reference and employer UTR

HMRC is adding more validation to the filing of RTI than it had for the filing of P45/P46/P35/P14 documents. In particular you must enter the Accounts Office Reference of the employer. Here is some guidance from HMRC explaining how to find out your Accounts Office Reference if you don't know it. You should enter the Accounts Office Reference on the Payments tab of the employer form (From Payroll One Version 1.13.8 the Accounts Office Reference has been moved to the main tab of the employer form in the HMRC login area, since this item is now compulsory for all employers, but you can still click on it in its old location in order to enter it).

Please find and enter your Accounts Office Reference now as that will avoid a panic later when you need it. Please do not call us to find out what your accounts office reference is, since we have no way of knowing it and no way of finding it out for you. If you can't find it you must contact your tax office. Please note: The requirement to enter Accounts Office Reference is compulsory. HMRC will reject RTI submissions that don't include it. The accounts office reference on RTI submissions has nothing to do with payment to HMRC, it is a security cross-reference for HMRC against PAYE reference.

You should also enter either an SA UTR (if the employer is under Self Assessment) or a CT UTR if the employer is a Ltd company. These are ten digit numbers that uniquely identify the individual or company to HMRC. If the employer is neither an individual nor a Ltd company then you should leave both SA UTR and CT UTR blank. HMRC states that one of these should be filled in "if applicable" but RTI filings will still work perfectly if neither is filled in. SA UTR or CT UTR can only be filled in once you're running our 2013/14 software

Check your employee names, NI Number, birthdays, and addresses

HMRC is very keen that good quality data should be filed by RTI, and where employers file poor quality data they can expect to be called by HMRC to provide more information so that employees can be identified. To reduce the number of such calls please inspect your data and check for every employee:

  • Employee Surname has correct spelling
  • Employee Forenames have been entered in full. Please do not enter initials. Do not use friendly forms like "Dave" or "Sam" where the employee's name is "David" or "Samantha" for example.
  • Fill in the employee's NI Number if you haven't already done so. If you don't know the employee's NI number then it is even more important to have entered their name, birthday, and address correctly so that HMRC has the best chance of identifying the employee.
  • Fill in the employee's birthdate if you haven't already done so
  • Check that the employee's address is complete and correct. Addresses are on each employee's "Personal" tab and you need to fill these in

You can only fill in the weekly hours and passport number after you start running software version 1.14.2 or higher. On each employee's "Personal" tab find the dropdown box labelled "Weekly Hours" and fill in each employees normal weekly hours. This is in a band from 0-15.99, 16-29.99, or 30+. This entry may affect the employee's entitlement to state benefits. If the employee doesn't have a normal working pattern then you should just guess what is likely to apply to that employee. Some employees may not work hours at all (eg pensioners receiving money in a pension payroll) in which case you can use the setting, "Other". There is also an "Actual" setting which will use the hours that you enter against the employee each pay period to decide which band they go in.

◾If you have it you should enter each employee's Passport Number on the Personal tab. You should do this if for example the employee is an EU citizen and you checked their passport to ensure that they have the right to work in the UK.

 

Please make a point of setting up employees accurately and completely when they start with you. Of course most Payroll One users already do this (HMRC tells us) so most of you won't need to change your processes. But please check your existing employees now anyway.

HMRC has put my new company in the RTI pilot. What should I do?

You can start using RTI straight away in Payroll One by downloading our current release if you don't already have it.

On the main employer form you'll need to set up your RTI status as "Pilot" and then the system will automatically file RTI returns for you whenever necessary. Filing occurs when you advance a payroll to the next week or month, so as soon as you're happy that your employees' pay is correct you should click the button at the bottom right of the payroll form to advance to the next period. You'll be prompted to file RTI when you've done that.

Please read the rest of the RTI guidance on this page to make sure that you're operating correctly. If there is any important news concerning RTI we'll add it here.

Employers on the RTI pilot (for whatever reason) don't have to file P45 or p46 when employees start and leave, nor do they file P35/P14 at year end. They still process starter P45 documents and give P45s to leavers, of course.

Do I need to file anything before my first payment submssion?

Employers with more than 250 employees need to file an Employee Alignment Submission (EAS) before they file their first payment submission. The alignment submission is a list of all the employees in your organisation. HMRC will inform you if you need to file one.

Employers with fewer than 250 employees can file an EAS if they wish, but HMRC doesn't recommend it and neither do we.

EAS can be filed from the Reports button on the employer form in the software. Once you've filed any other RTI submission type an EAS is no longer allowed under HMRC rules so cannot be selected.