Employers – Are you ready for Real Time Information (RTI)?

HMRC is introducing new rules relating to all Employers these come into effect on 6 April 2013.

For all but very small employers (9 employees or less) it will be necessary to operate your business payroll via an RTI ready software package.

The first step of moving towards this is a payroll cleansing exercise that all employers should have already undertaken or have in hand now. It is essential to ensure that all of the following details are correct for each of your employees:

• Name
• Date of birth
• Gender
• Address
• National Insurance number

The new RTI rules mean that employers have to file a Full Payment Submission (FPS) each time they make payment to employees, i.e. Weekly for weekly paid staff or monthly for monthly paid staff.

Your payroll records will have to include a note of the number of hours worked in each pay period and you will need to process information for part time and casual employees paid below the National Insurance Lower earnings Limit.

As you might guess with new requirements placed upon employers comes the opportunity for HMRC to charge further penalties. The good news is that HMRC will not be charging penalties for late filing of FPS forms during the first two tax years, the current late filing penalties will continue.

The bad news is that penalties for filing inaccurate forms will be applied sooner, whilst they will not be applied during the 2012/13 tax year they may be applied after the end of the tax year once the final FPS has been submitted.

Production of year end forms P60 for employees and forms P35 and P14 for HMRC still apply as normal.

This is yet another opportunity for HMRC to profit from business owners by pushing more reporting requirements on to them adding to an ever increasing administrative burden.

There is of course an easy answer to this, simply outsource your payroll.

Outsourcing your payroll can take away the hassle of RTI and this is something that we offer to a large proportion of our clients. If you are interested in outsourcing your payroll processing and HMRC reporting obligations, contact Elaine Cheetham or any member of our Tax Team for an informal chat on how we can help.

This blog post was written by Darrell Booth, Head of Tax for Manchester accountants and business advisors, Sedulo.
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