IS YOUR PAYROLL INFORMATION CLEAN?
Forewarned Is Forearmed ...
Posted by Maureen Windridge on 23/02/2012
Real Time Information, or RTI, is a new system that's being introduced by HMRC to improve the operation of Pay as You Earn (PAYE). PAYE information will be collected more regularly and more efficiently when employers make their regular payroll submissions ...
submitting in real-time is a fundamental shift in the way paye works
The PAYE system has remained pretty much unchanged since it was introduced in 1944 and in 2012 it celebrates its 68th birthday. It is the method used by employees to pay Income Tax and National Insurance Contributions (NIC). Employers deduct payments from employees' pay each week or month.
The reason it has remained unchanged during the last 68 years is that for the majority of employers and employees it works. However it is prone to fraud and this makes it difficult for HMRC to identify errors and help customers (employers and employees) resolve problems quickly and efficiently.
Under the HMRC RTI system, employers would be required to send data about PAYE, NIC and student loans every time they pay their employees, rather than with their end-of-year tax return. HMRC hopes that RTI will help them to operate more efficiently and accurately.
RTI is a new way of submitting payroll data to the Tax Office. Instead of sending the PAYE information in annually after the end of the tax year, all employers will have to submit the payroll data online on every occasion the payroll is run. This will allow the Taxman to understand who is being paid what amounts and what PAYE is due, on a real-time basis.
The details of employees' pay will be passed to the Department for Work & Pensions, to allow the amount of Universal Credits (which are replacing Tax Credits from October 2013) paid to workers to be adjusted on a monthly basis.
RTI will be compulsory for all employers and pension providers by October 2013. Before payroll data can be accepted under the RTI system it must be 'clean'. That means for each of your employees, you will need:
If the data for one of your employees does not agree to that on the Tax Office computer, the submission of the payroll data under RTI may fail, and you may get fined.
Start getting into good habits now. Check your payroll data is clean and remember to make sure your payroll software providers are going to be ready for the transition so that it will be smooth and seamless for you and your business.
If you'd like any more information about RTI or any aspects of payroll and bookkeeping then you might find it a good idea to call me on +44 (0) 1908 692378 and I'd be happy to help; many businesses seeking a Bookkeeper in Milton Keynes choose to work with me and feel safe in the knowledge that their accounting matters are in experienced and capable hands!
Until next time ...
I consider myself to be incredibly lucky because I am a bookkeeper. At the age of thirteen I did a three year course in three months and passed with distinction. Many years have gone by since then and I am still fascinated by the process of double entry bookkeeping. A process developed over 500 years ago by a venetian monk called Luca Pacioli.
Many people would like a machine that they could put all their paper work into at one end and it would come out the other end all sorted totalled and balanced. I'm glad it hasn't been invented because it would take all the fun out of my work!