Payroll

Real Time Information (RTI)

RTI reporting became compulsory for most employers on 5 April 2013.

Under RTI employers submit payroll information to HMRC in real time. Employers who are using RTI are no longer required to submit forms:

  • P14 and P35, or
  • Employee starter or leaver forms P45. P46 and P46 (pen)

RTI reporting requirements

  • A Full Payment Submission (FPS) each time, or before they pay any employees
  • An Employer Payment Summary (EPS) each month, which shows any adjustments to the amount they owe HMRC
  • An Earlier Year Update (EYU) to correct errors or make adjustments to information submitted in earlier years
  • Employers must still provide employees with a P60 end of year summary by 31 May following the tax year

There is a strict penalty regime for non-compliance, so it extremely important to understand RTI and get it right.

End of year penalties

Under RTI the employer files a FPS for the last payment of the tax year and there is no P35 or P14 to submit to HMRC. If the employer fails to report the end of year FPS there will be an end of year penalty. This should be notified by September following the tax year.

Late payment of PAYE

Late payment of PAYE penalties under schedule 56 FA 2009 continue to apply unchanged in RTI reporting.

Late submission of in-year returns

Penalties are now in force for late filing. In all cases the first late submission of the year is ignored. Late filing applies to FPS and EPS reporting.

An EPA return is still required by the 19th of each month if there is no pay to report in a period.

RTI late filing penalties

No of employees

Monthly penalty

1-9

£100

10-49

£200

50-249

£300

250 +

£400

Additionally there is a penalty of 5% of tax and NIC which should have been reported if you are more than 3 months late.

When penalties apply:

  • The size of the penalty is based on the number of employees in the scheme
  • One default each year is penalty free, but all subsequent defaults attract a penalty
  • Penalties will be charged quarterly, subject to the usual reasonable excuse and appeal provisions
  • An additional tax-geared penalty may be applied if a return is outstanding for three months or more
  • Penalties escalate in size for subsequent defaults
  • Penalties are due within 30 days of the penalty notice

Interest

HMRC charge interest on any payments, including penalties, not made by the due date. 

In-year Full Payment Submissions (FPS) 

Employers and pension providers must submit an FPS 'on or before' they make a payment to an employee or pensioner. If they still have information to send after 5 April, they can send this on an FPS until 19 April, then on an Earlier Year Update (EYU) after that.

New employers are allowed up to 30 days to file their first FPS.

Penalties for inaccurate returns

  • Penalties may be charged after the end of the tax year, based on the final FPS for the year
  • Penalties may apply to in-year returns and the final FPS

Late payment penalties

Penalties under Sch 56 FA 2009 apply to employer payments of PAYE and NI whether paid monthly or quarterly.

Removing will apply automatic in-year penalties, subject to a tolerance of £100 (difference between employer's payment and what has been reported to HMRC). As calculation is automatic and based on the number of late payments the automatic system will adjust later penalties rather than recalculating the earlier months already passed, as under the current Sch 56 FA 2009 regime.

 

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