Real Time Information
The introduction of PAYE RTI in April 2013 fundamentally reformed Pay As You Earn tax reporting, requiring all UK employers to notify HMRC of their liability to PAYE at the time or before they make payment to their employees. Payroll software collects the necessary information and sends it to HMRC via the Government Gateway. It represents the largest change to PAYE since its introduction in 1944, where previously employers paid tax and National Insurance contributions due to HMRC on account but only declared and reported their actual liabilities to these sums at the end of the tax year in a P35 return.
All employers are now required by law to submit an RTI return
every time employees are paid as part of payroll arrangements.
Pension providers are also affected. Although there is still some
leeway for the very smallest employers and new employers
when submitting their very first RTI return, the vast majority of
employers or their payroll agents are now reporting PAYE
information to HMRC in real time.
The dates on which payment of tax and National Insurance
deductions are made to HMRC remain the same, either the 19th
or 22nd of the month or quarter following the reporting period.
The Government’s commitment to the reform of the welfare system through the introduction of Universal Credit requires employee earnings data in real time. PAYE RTI enables HMRC to pass earnings data to the Department for Work and Pensions, so that Universal Credit claims can be assessed based on accurate employee income amounts. The introduction of Universal Credit has dictated the timescale for HMRC’s introduction of PAYE RTI.
Data from RTI is being used to support the administration of Universal Credit in many Job Centres, and the national accelerated roll-out of UC (which began in February 2015) will see UC in over 80% of UK Jobcentres by December 2015. RTI data is also helping to eliminate fraud and error in the benefits system, and the Chancellor announced in the March 2015 Budget the intention to make wider use of RTI data to further improve these savings.