Real Time Information (RTI)
Real Time Information (RTI) is probably the biggest change to hit PAYE since the Pay As You Earn system was first introduced in 1944 and the impacts are going to be huge.
From April 2013, all but a handful of UK employers and pension providers will have to electronically submit information to the HMRC about PAYE deductions as they are made, instead of annually. The RTI pilot is already in progress, running from 1 April 2012 until 31 March 2013, with many obstacles and challenges expected along the way.
To help you overcome these challenges, we have created these web pages as a one-stop shop where you can learn about the RTI changes but also get all the latest news direct from HMRC, with whom we work very closely. At Advanced Business Solutions we have achieved the HMRC’s PAYE RTI recognition.
This website contains advice and tips to help you prepare for the changes as well as events and training courses at which you can learn more. You can download collateral to access more information, for example, our white paper outlines what’s involved, impacts on employers, concerns and tips. Finally, our useful links will give you direct access to external information on the HMRC website, such as Employers ‘frequently asked questions.’
How does RTI work?
Under RTI, employers and pension providers will tell HMRC about tax, National Insurance contributions (NICs) and other deductions when or before the payments are made, instead of waiting until after the end of the tax year. RTI reporting will become an integral part of an employer's normal payroll activity and so when employers run their payroll, the payroll software will gather the information required and send it to HMRC.
With RTI up and running, the information sent to HMRC will be far more accurate and timelier than it currently is.
The only employers that are exempt from electronic RTI submissions are those whose religious beliefs are incompatible with the use of electronic communications and individuals who employ care professionals to provide services to a disabled or elderly person in their home. These employers will be permitted to provide RTI on paper.
RTI data will need to be submitted from April 2013 with ongoing penalties applying to late filing of RTI data expected to be introduced from 2013/14.
Learning from the RTI Pilot
A RTI pilot is being run by HMRC to iron-out the RTI issues and obstacles in advance of all employers coming onboard with RTI in April 2013. This pilot, which is a huge logistical exercise involving live data, involves ramping up organisations’ involvement in the pilot from just 10 employers in April 2012 to 250,000 by March 2013. All employers involved in the pilot are participating in collaboration with their payroll software providers to ensure that their payroll systems are able to effectively cope with RTI requirements.
At Advanced Business Solutions we have achieved the HMRC’s PAYE RTI recognition.
Just 10 employers (or more accurately, PAYE references) are taking part in the pilot or ‘pre-pilot’ for a month from April until May 2012. This pre-pilot is all about testing the systems to ensure that they can handle the data volumes before a further 310 employers come onboard in May.
In July 2012, the pilot is being extended to include 1,300 UK-wide employers and then from November 2012, HMRC will be phasing-in thousands more participants with a target of having 250,000 employers onboard with RTI by March 2013.
The RTI pilot officially ends on 31 March 2013, with all UK employers being required to submit live RTI data from 1 April 2013.
Several clients from Advanced Business Solutions are participating in the RTI pilot providing visibility of the changes and enabling both Advanced and our clients to find out what is happening early doors.
As pilot companies have the opportunity to test that RTI is working for them, they can highlight any issues early on and find out what they need to consider and look out for so that RTI is working as it should. It also provides the opportunity for organisations to steer how RTI operates.
Another key benefit is that all participating companies are ‘hand held’ by HMRC throughout the process. They will also be receiving one-to-one attention and assistance from their payroll software providers. Having this ongoing support slowly and carefully eases organisations into RTI.
As part of the pilot (and the RTI process in general) there are several key stages employers should be aware of in order to get fully up and running with RTI:
- Data Improvement
- Payroll alignment
- Full payment submission
To read moreabout the key stages employers should be aware of and to get more tips on making RTI work, please download our white paper.
Throughout the RTI pilot, the participants will be supported by both the employers’ payroll providers and HMRC, effectively ‘hand holding’ the participants throughout the process. HMRC is allocating a customer relationship manager to each pilot employer, however it will still be heavily reliant on the software providers to pass on information to those customers involved in the pilot.
Lessons learned from the pilot
Payroll and Pensions Supervisor, Aircraft Research Association
“My advice to those employers looking to get involved in the RTI pilot is to be positive. View it as a means of getting in at the base level and learning, at a steady pace, the new ways we will have to work. It does not take up a great deal of time being involved with the RTI pilot. The greater part of the work is completed by the software provider and HMRC. We are the middle men who make sure that the software works in a live environment and test that the HMRC software works through the transmission of our data.”
Systems and Payroll Manager, The Brendoncare Foundation
“We reviewed internally and decided that it was important for us to get involved in the RTI pilot as the care industry has pay periods that are unusual (12 pay periods each year comprising a pattern of every 4 weeks, every 4 weeks and then every 5 weeks). We felt that if we didn’t make the HMRC aware of the nuances of the care industry’s payroll early on, they wouldn’t think about it and there would be issues further down the line.
Getting involved in the pilot allows us to have direct input and ensures that we can play an active role in shaping how the RTI will operate in relation to the care sector.”
Preparing for the RTI
With any change comes worry about its implications, and RTI is no different. RTI will be delivering significant change and will require an adaptation of payroll processes in order to comply with its requirements. As it remains unclear as to how exactly RTI will perform and how payroll departments will accommodate the changes, in some cases there is a real worry about the day-to-day impacts of RTI.
Typical concerns include – Will RTI involve a lot of extra work and training? Will HMRC be able to cope with the timings and/or intricacies of our particular payroll? Will we be able to get our employee data cleansed in time? Will the RTI technology be up to the task?
HMRC admits that it does not currently have all the answers, which is why the RTI pilot is so important. Information currently available on RTI from HMRC:
Advice on preparing for RTI
The following top tips will help organisations to minimize the impact of RTI on the smooth running of your department.
- Prepare carefully – What additional information do you need to collect? Consider who from the company needs to be involved in the project and allow them time to prepare properly.
- Work closely with HMRC and don’t be afraid to ask questions of your customer relationship manager.
- Make the most of the resources available by attending RTI workshops, webinars and conferences.
- Remain close to your payroll software developer throughout the pilot. They are there to support you every step of the way.
- Spend the time and effort cleaning your employee data. The time spent will be invaluable in the long run – see more information on this below.
The RTI pilot is expected to iron out employers’ queries and concerns, making the roll-out of RTI to all employers in April 2013 as trouble-free as possible. The key to success in any major change like this is preparation and planning. Working with HMRC and suppliers like Advanced to formulate a comprehensive project plan to implement the changes will minimise the impact on the running of the payroll department.
The importance of cleansing your data
For those of you about to embark on the RTI pilot the one thing you can do ahead of time is start to look at your existing employee data. This will help prepare you for the initial alignment submission that must be submitted to HMRC immediately before you send your first FPS (Full Payment Submission).
HMRC have stated that 80% of data quality problems that they have come up against relate to the employee's name, data of birth and NI Number – this is where they are therefore concentrating their efforts when talking to companies. All data that is submitted via RTI is fully validated on entry into OpenPeople, however systems cannot do a lot where the data is wrong if it is actually valid. The sort of examples HMRC have been coming up with are names that are obviously incorrect e.g. Mickey Mouse or Twilight Worker – but technically correct from a validation point of view. There may not be many of these about, however one thing that is commonly done is the use of shortened names or 'known as' names.
HMRC are specifically requesting that the proper name is ALWAYS used i.e. the name as per birth certificate or passport. This may have an impact on how you communicate with employees e.g. payslips showing Elizabeth Smith instead of Liz Smith. To this end HMRC are encouraging all customers to ensure that information on new employees is validated by checking official sources such as HMRC, DWP, Passport or Birth Certificate.
All employers regardless of whether they are joining the pilot in November should be starting to think about this!
There are currently no events available.
Latest RTI News
Welcome to the Advanced Business Solutions Real-time information (RTI) news feed.
We will use this news section to update you on how the pilot is progressing, advise you on any changes announced by HMRC and our views on those changes, explain any current issues with the pilot and how to tackle them and generally use it to pass on useful hints and tips. Feel free to put your tuppence worth in!
Disproportionate Bacs upgrade costs: employers advised to negotiate - 19.02.2013
Bacs suppliers have been heavily criticised after charging employers disproportionately for RTI upgrades. The upgrades, which experts argue should be free or only incur a small charge have cost some employers up to £30,000.
"I would advise people if they do not like the cost they should go elsewhere and buy another Bacs product from somewhere else," said Tim Kelsey of Kelsey Payroll Services. "Negotiate hard as this is a totally negligible change they have had to make to their software and the charge they are looking to collect is out of all proportion to the work they put in."
Guidance issued by HMRC - 08.02.2013
If you have taken an employee off your payroll in error (for example, an employee changes their mind and decides to continue working for you) and you have already notified HMRC of their leaving date on an FPS, you should continue making payments using the same payroll ID and submit FPS but do NOT enter a new start date.
You cannot use this method if you have given the employee a P45, in this case you will need to make the employee a new starter and give them a different payroll ID.
Start Preparing for RTI - 21.01.2013
If you have not already done so you should be starting to look at your employee data and ensure it is as accurate as possible. HMRC have stated that 80% of PAYE data quality issues are caused by incorrect information about an individual's name, date of birth or National Insurance Number (NINO). It is therefore very important that the employer takes care when entering the aforementioned personal details and also that this information is validated using official documentation e.g passport. Particular care should be taken when entering forename and surname i.e. full forename and not simply initials or ‘nickname’ are used and surname is spelt correctly.
HMRC have published the following documents which may give some useful pointers regarding data quality:
- Checking Official Documentation
- High Level Matching
- How to record employee information correctly
- Quirky PAYE facts
From an OpenPeople point of view, you can run the Employee Validation Report to check that your data is valid. This report will highlight any data that would fail RTI validation. In addition why not add a message to your payslip and request that employees contact you if the name, address etc shown on their payslip is not their full and proper details? If you use laser payslips you could extend the message by adding some text to the payslip template.
Pilot Update - 18.01.2013
We now have 20 customers (137 PAYE References) processing RTI through OpenPeople – over 50,000 employees. A further 15 customers (103 PAYE References) are due to join the pilot by end of March. This will take the total number of employees processed through the RTI pilot to nearly 110,000. Feedback from participants has been that it has been really straight forward!
HMRC have now closed the doors to any more employers joining the pilot.
All customers (unless acknowledged by HMRC as an exception) must start filing RTI returns at the start of the new tax year. Normal tax year end procedures will apply for those who have not participated in the RTI pilot for the 2012/13 tax year.
BACS - 15.01.2013
It is important that you check with your BACS suppliers that the version of the BACS software you use is fully RTI compliant. This means they are able to process a standard18 BACS file with characters 32-35 of the detail records containing a ‘/’ followed by 3 randomly generated characters. They must then be able to create the 64 character RTI BACS hash from a combination of this randomly generated string plus the employee’s and employer’s bank sort code and the Net Pay value contained within the BACS file.
Please note that the lead time for implementing or upgrading to RTI compliant BACS software will increase exponentially as we approach the April deadline.
If you do not have a BACS Service User Number (SUN) then it is likely that you are not using BACS to make payment to your employees and therefore the above does not apply.
Penalties - 11.01.2013
Penalties for Late Returns
HMRC have announced that there will be no penalties for late filing of in-year RTI returns during the 2012/13 and 2013/14 tax years. The current penalty regime will however remain for late filing of end of year returns i.e. the final FPS of the year must be submitted by 19 May following year end to avoid penalties.
Penalties for Inaccuracies
For the tax year 2012/13 HMRC will not charge penalties for inaccuracies identified on an in-year FPS, but have said that penalties may be charged after the end of the tax year based on the final FPS of the year. Penalties for inaccuracies may apply to in-year FPS returns from the 2013/14 tax year.
Penalties for Late Payment
For the tax years 2012/13 and 2013/14 HMRC will use a risk-based approach to identify employers who are not complying with payment obligations and who may therefore be subject to late payment penalties.
Timing of RTI Returns (Announced by HMRC 12/11/2012)
The guidelines state that an FPS return must be sent ‘on or before’ the date payment is made. Some employers, particularly those paid in cash, have said that it will be impossible to comply with these regulations. HMRC have therefore announced that they will permit extra time in ‘some’ cases. There will be up to 7 days to report PAYE information to HMRC where:
- “Payments are made on the day of work which vary depending on the work done, where it is impractical to report in real time – such as:
- A crop picker paid in cash at the end of the day, when their pay is based on how much they have picked or
- A casual worker in a pub paid at the end of the night”
“Payments are made to employees for whom employers do not have to maintain a Deductions Working Sheet (form P11)”:
See http://www.hmrc.gov.uk/payerti/on-or-before.pdf for a full list of exemptions from the filing ‘on or before’ rule.
Event dates announced! - 15.10.12
The dates have been announced for the Advanced Business Solutions RTI and Auto-Enrolment seminars, hosted in conjunction with the HMRC, the Pensions Regulator and NEST.
The full day seminar will guide you through the new RTI and Pension Auto-Enrolment regulations including how to prepare and what other companies are doing. You will learn about how Advanced Business Solutions can help you through this changing time, preparing for the changes by adapting your payroll systems. NEST (National Employment Savings Trust) will also be on hand to introduce the new national workplace pension scheme that is available to employers.
There will be plenty of opportunities to ask your burning questions throughout each part of the day.
The events will be hosted on various dates at each of the following locations:-
- 7th November – National Motorcycle Museum, Birmingham
- 13th November – Thistle Euston, London
- 28th November – Airth Castle Hotel & Spa Resort, Falkirk, Scotland
Events take place from 10:00am to 4:15pm.
For full details and booking information visit the Events page.
Pilot feedback very positive - 10.10.12
OpenPeople currently has 10 users on the RTI pilot with 5 having joined in April/May and another 5 in July/August. There are around another 25 awaiting confirmation from HMRC as to whether they will be accepted on to the November phase of the pilot.
The feedback to date from the ‘active’ pilot customers has been very positive with the process not seemingly generating any real increase in work for the payroll department or indeed raising any issues of note.
Pilot Full! - 3.9.12
We have been advised by HMRC that the pilot is now closed to new entrants. HMRC have reviewed their numbers and have advised us that they have now got sufficient numbers in place for the November 2012 to March 2013 phase of the pilot. For those of you who have put yourselves forward for the pilot your details have been logged with HMRC and I would expect them to be making some contact with you over the next month or so to agree 'start dates'.
If you do have more than 5,000 employees you should however be contacting us ASAP as HMRC do want to make sure that every company with this number of employees or more is given every opportunity to join ahead of the April 2013 go-live.
Do you have more than 5000 employees? - 17.8.12
On 17th August HMRC communicated to software developers that they wanted all companies with more than 5,000 employees to join the RTI pilot ahead of the April 2013 'go-live' date. The 5,000 figure mentioned relates to total employees (including pension payrolls) i.e. could be in a single PAYE reference or across multiple PAYE references.
We have since sent an email to the customer base requesting that anyone this affects should contact Advanced ASAP so we can set the wheels in motion for joining the pilot – hopefully you will all have received that email. HMRC have added that companies with greater than 5,000 employees who do not wish to join the pilot will be 'requested' to delay moving into RTI until between June and September 2013, thereby avoiding the busy April/May period
The Kick Off - 6.7.12
To kick off, here’s an update on the pilot... We are pleased to report that the initial phase of the RTI pilot has gone smoothly. We have five OpenPeople customers who put their trust in both ourselves and HMRC who We are glad to say have come out of the other end relatively unscathed! In fact, feedback so far has mostly been around how surprisingly simple the whole process has been. These initial ‘pilots’ have all successfully sent their ‘Employer Alignment Submission’ and followed that up with equally successful Full Payment Submissions (FPS). It is a pilot so inevitably there have been some software changes along the way - to quicken up processes, respond to HMRC updates, fix minor bugs and generally act upon feedback from participating customers.
Our next batch of pilots is currently at the departure gate awaiting take- off! They have had their official invite letters from HMRC and are due to start sending their alignment submission during July and August. All they need to do now is make sure their data has been cleansed (we don’t want any Mickey Mouse’s on the payroll), and attend the webinars we are running over the next week to guide them through the updated software.
The total number of employees processed through RTI so far is around 6,500. By the end of the summer the total number of employees whose details have been submitted to HMRC via RTI will have increased to around the 30,000 mark. That is hopefully reassuring for everyone waiting in the wings!
We will be formally notifying HMRC in the next week of those customers who have already expressed an interest in joining the November 2012 to March 2013 phase of the pilot. If you have not expressed an interest but have been considering doing so it may be an idea to check out Joining the Real Time Information pilot. If you are interested you will need to let us know ASAP as although HMRC would like as many coming on board as possible in the final phase of the pilot, they do have deadlines in place.
In the meantime if you have any queries or concerns about RTI not answered on our RTI website please fire them off to me at firstname.lastname@example.org.
We may not immediately answer but will definitely use the queries to build up a useful FAQs section that we can post on the RTI website. Watch this space!
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