Are you ready for Real Time Information - HMRC's new payroll legislation?

By Verity Patch, John Needham & Co Accountants

Over the coming months a new part of payroll legislation called Real Time Information (RTI) is being introduced.  This will mean a change in how you send information to Her Majesty’s Revenue and Customs (HMRC).  RTI is a submission to the HMRC of all payments made to employees in a pay period; essentially this will mean that HMRC will know how much tax and NI you must pay. 

What notice will I get from HMRC?

You will be sent a letter by HMRC 4-6 weeks before you are expected to ‘go live’ with RTI.  This date is not optional and cannot be changed. 

What you need to do:

• Check that the PAYE software you use is RTI compatible, for those who use the HMRC’s Basic PAYE Tools, this will be updated for RTI in February 2013.

• Check the data you hold on your employees is correct: their full name, correct title, date of birth (as verified by your employee), address (all lines including postcodes) and confirmation of National Insurance numbers.

• One additional change is that those employees who have previously been paid below Tax and NIC thresholds will now also need to be included on your payroll system and their figures submitted every time they get paid. 

• Another integral part of the RTI system being introduced is that HMRC will now require details of employee hours worked.  This information will be used by HMRC to ensure correct benefits are paid to qualifying employees.  For some employers this may be difficult to provide, however the advice given to prevent incurring financial penalties is to use contracted hours.   

For more information on RTI visit: www.hmrc.gov.uk/rti .

John Needham & Co offers full Payroll Services including registration with HMRC.  For further details please contact Verity Patch by e-mail: verity@johnneedham.co.uk.