What is RTI: Real-Time Information (RTI) reporting for PAYE? How does it work?

This is a freeview 'At a glance' guide to Real-Time Information (RTI) reporting for PAYE.

At a glance

Real-Time Information (RTI) means reporting payroll almost in 'real-time' to HMRC. Employers report to HMRC electronically in advance of making any salary or wage payments to employees.

  • Since April 2013 most employers have to report to HM Revenue & Customs (HMRC) monthly under RTI.
  • Reporting is done on or before any payment is made to an employee.
  • Employers may be fined if they fail to file under RTI or make errors in reporting.

RTI concessions history

  • Penalties for error in operating the Off-payrolling rules applied for 12 months from 6 April 2021.
  • On-going: a reporting relaxation for those Reporting deemed payments under IR35. This allows late reporting by 31 January following the year of assessment in cases where it is difficult to assess IR35.
  • 11 Nov 2012: HMRC allow up to seven days to report payments where real-time reporting is difficult or impossible and up to 14 days to report payments of benefits and expenses subject to Class 1 National Insurance Contributions (NICs) but not taxed under PAYE

Overview

  • Under RTI all employers require an internet connection and RTI enabled software to file PAYE online.
  • Employers with less than 10 employees may use HMRC's free software. Most commercial software may be easier to use.
  • RTI requires reporting at the same time as, or before, each salary or pension payment is made, rather than at the end of each tax year.
  • Nil returns are made.
  • There are changes to what is reported. Forms such as P45 and P46 and the year-end reports P35 and P14 will no longer be filed with HMRC although employers must prepare P45s and P60s for employees.

Under RTI employers are required to make:

  • A Full Payment Submission (FPS) electronic submission report to HMRC before they make any payment to employees.
  • An Employer's Payment Summary (EPS) if during a PAYE month an employer makes any statutory payments to HMRC (Statutory Maternity Payment or Sick pay for example) or suffers Construction Industry Scheme (CIS) deductions, or has not paid anyone.
  • Up to 5 April 2019, Earlier Year Updates (EYU) had to be used to correct errors after 19 April following the end of the tax year in which the error was made. If corrected by 19 April, then an additional FPS could be submitted.
  • From 6 April 2019, HMRC no longer require an EYU to correct errors. Instead, an additional FPS should be submitted with year to date figures, which will overwrite the original figures.
  • Employers who use the BACS system for making payments to employees will have to file an additional report under RTI
  • It is not compulsory for employers to use BACS.

Getting started

You need to be online with the correct software and ensure that the data you hold on your employees is complete.

All employers have to:

1. Ensure that their software is RTI enabled.

2. Cleanse the data on their payroll to ensure that they are holding only the current details of their employees.

3. Collect the passport numbers of all new employees.

4. Ensure that they have all the details required to run the payroll before they start as it can be complicated to correct reporting errors.

RTI Penalties

Penalties under RTI include:

Penalties are calculated automatically and employers are able to appeal penalties. 

RTI Resources

The ICAEW, ICAS, ACCA and Federation of Small Business have set up a website: www.payerti.org which carries guidance.