HMRC Real Time Information (RTI)
Under the current PAYE system employers tell HMRC what deductions they have made from employees pay after the end of the tax year, when P14’s and P35’s are produced.
Using RTI, employers will tell HMRC about tax and NI contributions when or before the payments are made, instead of waiting until after the end of the tax year.
In theory, this will have the advantages of
• Making PAYE more accurate for individuals, and thereby reducing retrospective over and under payment notices issued.
• Make Year End procedures simpler for employers.
• Reduce tax credit errors and associated fraud.
Year End forms will be replaced by Full Payment Schedules (FPS) submitted online via the Government Gateway. The first of these will detail all employees who have been employed during the current tax year, including starters and leavers, or those that have not yet received a payment in the relevant period.
Subsequent FPS’s will contain only pay and deductions details for the relevant period.
RTI will be phased in, on a voluntary basis initially, and will become mandatory of all employers starting April 2013.