What is Real Time Reporting?
If you run a payroll, either as an employee of your own small limited company or as a self-employed trader with staff then Real Time Reporting (RTI) will apply to you.
Before you pay any of your employees you will need to submit an online file to HMRC.
This online file will contain information on:
- Identifying data on each employee such as first name, surname, date of birth and national insurance;
- Income tax deducted from the employees;
- Employers and employees national insurance;
- Details of student loan repayments;
- Details of statutory sick pay, maternity or paternity pay; and
- Information on leavers and joiners.
Why are HMRC introducing online reporting?
The system is being introduced to provide data to the Department of Work and Pensions so that universal credit adjusts on each pay period to ensure tax credits are not over or under paid.
What will you have to do?
As an employer you will no longer be able to rely solely on paper based calculation sheets.
Your choice will be:
- Use a software package that has been tested and authorised for RTI filing;
- Use a payroll agency or your accountant to submit the data for you; or
- Use the HMRC online service.
What should you do now?
All employers, apart from a few large employers, will need to go live on 6th April i.e. the start of the 2013-14 tax year.
You should check the fixed data on your employees to ensure that the names, date of birth and national insurance numbers are correct for each person.
As a small employer your first submission online will include an Employer Alignment Submission in addition to the standard data (as listed above). ‘Employer Alignment Submission’ sounds complicated but it just means that the data you hold on your employees is checked against the information in HMRC’s database.
What about penalties?
Fortunately HMRC are going to operate a light touch on penalties until April 2014 so you have a year to get everything right.
Clients of Clearways Accountants
If you are a client of Clearways Accountants you have nothing to worry about. We already use RTI ready software that has been used in the testing over the last year. We will be sending a summary of the data we hold on all your employees for you to check. All our systems are ready to go, and of course, we will be testing it on our own employees first!
If you are worried about this change, why not take advantage of our free consultation? Request yours today.