Real Time Information or RTI is being introduced from April 2013 and will be mandatory from October 2013 but unlike other major developments affecting your employees like Auto Enrolment for pensions this one isn't yet receiving as much publicity and Charities need to be aware of the developments.
Aimed at improving the accuracy of the PAYE process and reducing HMRC RTI is a fundamental change in the way the PAYE and NI is operated. It means that pay information will be submitted to HMRC at or before pay date unlike the present system of annual reporting.
The implications of the new system are that
- employee information has to be accurate
- submissions must be completed on time
- HMRC will know how much PAYE and NI is due
If you have employees it will affect you and may well signal the final straw for charities and other not for profit organisations who are processing their own payroll currently.
First steps - Payroll Alignment
One of the biggest hurdles could be the first step. This is the payroll alignment. When this happens depends on your business. It could be with your first Full Payment Submission (FPS) or if you are a large / complex employer it could be a separate process called an Employer Assignment Submission (EAS)
What the payroll alignment does is attempt to match information it holds about your employees with your payroll records. Having accurate data is essential so that your RTI submissions match up with the HMRC systems and other systems such as the DWP.
There are actually up to 120 key pieces of information to tie up but even a cursory review of the 3 most basic items that can highlight potential issues and additional work.
Employee Names (i.e. correct Gender, First name, middle name(s) and Surname). Sounds easy but consider
- Must be their legal name not their known as name Willian not Bill or Will, Susan not Sue etc
- Full names needed, no initials in the forename or surname fields
- Double barrelled names need dealing with correctly
You may need to see Passports or driving licenses to verify names, evidence of deed poll or marriage certificates for name changes.
Employee Date of Birth - do you hold them all? Do you need a birth certificate to confirm date of birth?
Employee National Insurance number (NINO) - is required if they have one. Do you need to see correspondence from DWP / HMRC to confirm the NINO if you know it. If you don't know it you will need the full current address including postcode.
Once you have gone through the process of checking your data the payroll alignment process then you are into the routine operation of RTI with its required submissions each period and all that entails. That will hopefully be the subject of my next Blog but if you can't wait then you can take a look at the HMRC RTI website.
Needless to say at Dataplan we will be handholding our clients through the RTI process both in its initial alignment phase and in the day to day operation.