Don’t Get Caught Out in April!

HMRC is introducing a new way of reporting PAYE – called Real Time Information (RTI), which will be compulsory in a matter of months. We are going to explain the changes you will need to make to your payroll and PAYE procedures so you don’t get caught out by the Taxman!

Under RTI you will be required to report to the Taxman details of your employees’ pay and deductions via the Internet each time you pay them, rather than annually as it is now. These details must be in the proper format and provided within a strict timeframe. There will also be changes to the procedure for new and departing employees. Read over the next few sections which aim to cover any questions you may have about RTI. If you have any more queries, please contact us.

What is RTI? RTI is a new system introduced by HMRC to report pay, tax, NI and other details each time the payroll is processed – be it weekly, 2 weekly, 4 weekly or monthly.

Previously, all employers were required to submit a P35 or P14 at the end of the tax year. With the introduction of RTI submissions being sent each pay period, HMRC will no longer require this end of year information after the 2012-13 year end and can instead keep track of all legislative processes in ‘real time’. Although P35 and P14 forms are being replaced by your RTI submissions, P60’s are still provided to employees at the end of each tax year as well as P11d’s where applicable.

So What Do I Need to Do? There are a number of steps required for the changeover… •Update or Acquire Software or Use a Payroll Provider When? As soon as possible or when your existing software provider tells you to, but by April 6, 2013.

To be ready to report your payroll information each payday you must do one of the following: • Get payroll software if you don’t already have any • Update your existing payroll software to a version with this functionality (your provider can advise on this) • Use a payroll provider to do the reporting for you (we can help!) • Ensure employee data is complete and correct When? Start doing this now!

Before you change to PAYE in real time it is important that the data you hold in your payroll records is complete and accurate. You must check and, if necessary, update the data for all your employees or pensioners – certain details are essential such as name, date of birth and National Insurance number, and must be in full and be correct. •Register for PAYE Online When? You should do this now.

You are probably already registered for PAYE Online. But if you are not, and you are responsible for your own payroll reporting, then even though there are changes in how you report your payroll information to HMRC, you will still need to register for PAYE Online because: • PAYE Online is how you may still send certain forms to HMRC • if an employee tax code changes, PAYE Online is one of the ways HMRC will tell you • to send your payroll reports to HMRC, your software will need your PAYE login details •Align HMRC’s data with yours When? At or before the time you send your first report to HMRC.

To make your first PAYE real time payroll report successful, the data that HMRC holds on your employees must match your payroll data. When you change your payroll to PAYE in real time you’ll need to send HMRC information about every employee who has worked for you in the current tax year, even if they’ve already left your employment. So even if you don’t have to start reporting payroll information in real time until the 2013-14 tax year, it’s best to have new software and procedures in place before 6 April 2013, so that all the necessary information is already stored in your payroll system ready to be reported.

•Start reporting your payroll information! When? Most employers will begin to operate their payroll in real time in April 2013, with all employers doing so by October 2013.

Once you have followed all of the previous steps, you will be in a position to start reporting your payroll information on time.

We hope you found this information useful.

The S4B Team