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Real time information – are you ready?

In April this year, the Real Time Information (RTI) system comes into force. It affects all employers, but as is often the way with the implementation of new regulations, a significant number of small businesses haven’t even heard of (never mind planned for) it.

From 6th April employers will have to send HMRC monthly details of how much each employee has been paid and how much tax has been deducted under the PAYE system. Currently details are sent annually. To ensure compliance, companies will have to update their current systems or set up new payroll software.

Make sure the following data you hold is correct (and correctly spelled too).

  • Employee name
  • National Insurance Number
  • Date of birth
  • Gender
  • Address

The starters and leavers process will be changed. Under the RTI system, you need to ensure you get the fullest possible data. But don’t make anything up. If information is not available, for example, your new employee has not yet been issued with a National Insurance Number, leave it blank.

Ensure your payroll software can produce the information needed and the payments software can carry the payroll file, including the RTI cross-reference.

HMRC says that RTI will provide a much needed update for PAYE, which was introduced when Winston Churchill was Prime Minister and at a time most workers stayed with the same employer for the majority of their working lives. It says that it will improve the operation of PAYE and stamp out the “incorrect or incomplete information” that HMRC receives from employers every year. The aim is to have current information to tackle businesses that are building up tax arrears much faster.

Employers will begin to the use the RTI service from April 2013, with the expectation that all employers will be using the service by October 2013.Businesses that are not RTI compliant by 2014 will face penalties. Information and advice about preparing for the introduction of RTI can be found on HMRC website.

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