Real Time Information (RTI) is a major change to PAYE that came into effect in April 2013. Employers have to submit PAYE returns electronically, using RTI enabled payroll software, each time they pay their employees. These returns form part of routine payroll procedures and will include details of individual employees’ pay, tax and other deductions.
RTI and paying HMRC
The due dates for payment remain unchanged. Cheque payments therefore need to be received by the 19th of the month following the end of the tax month of deduction and cleared electronic payments by the 22nd.
Under RTI, HMRC are aware of the amount of PAYE payment due as this is the:
- total amount shown on the Full Payment Submission(s) (FPS) for a tax month, including any corrections or adjustments submitted on or before the 19th of the following month
- less the amount shown on any Employer Payment Summary (EPS), also submitted on or before the 19th of the following month.
Where amended or additional EPS or FPS returns are made after the 19th of the month these will be reflected in the payment due for the following period.
HMRC also advise that employers should also use an EPS to tell them that there is no FPS to send (where no employees have been paid in the month) as, without it, HMRC will estimate what they believe is due and expect the employer to pay it in full. This estimate is known as the ‘specified charge’.
A specified charge will be issued for each month that the employer fails to report. A specified charge does not replace the need for an employer to send a FPS, as this still needs to be sent to report the actual deductions the employer has made.
Where an employer submits an FPS or EPS within seven days of the specified charge, these submissions will overwrite the specified charge. This means that an employer can pay the reported amount rather than the specified charge.
Employers can check their PAYE payment position by using the online PAYE Liabilities & Payments Viewer to confirm the real time submissions that HMRC have received and to check what is owed and been paid. This viewer will also include any specified charges.
RTI and micro employers
HMRC have announced that, although the vast majority of employers are finding PAYE reporting in real time straightforward, a small proportion of micro employers and their agents still need more time to adapt. They have therefore announced that existing employers with nine or fewer employees who need more time to adapt will be able to report PAYE information on or before the last payday in the tax month until April 2016.
HMRC will be encouraging micro businesses to adapt their processes sooner to ensure that they are ready to report all payments each time they pay their employees by April 2016.
HMRC have confirmed that employers with fewer than 50 employees will face automated in-year penalties for late real-time PAYE returns from 6 March 2015 which is later than had originally been anticipated. Those who employ 50 or more people face penalties from 6 October 2014. HMRC will send electronic messages to all employers shortly to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.
Level of penalties
For the purposes above, an employer who, during a tax month, fails to make a return on or before the filing date will be liable to a penalty as follows:
- 1-9 employees – £100
- 10-49 employees – £200
- 50-249 employees – £300 and
- 250 or more employees – £400.