How does HMRC Real Time Information (RTI) work for UK payroll?

Full answer

Real Time Information (RTI) was introduced from April 2013 and fundamentally changed how employers report PAYE to HMRC. Instead of an annual return, information is now sent with every payroll run. Full Payment Submission (FPS) The FPS is the core RTI submission. Employers must send an FPS on or before the date they pay their employees. The FPS contains: -- Employee NI number and tax code -- Gross pay and taxable pay in the period -- Income tax deducted -- Employee and employer NI contributions -- Statutory payments (SMP, SSP, etc.) paid in the period -- Year-to-date cumulative figures for each employee Employer Payment Summary (EPS) The EPS is used to reduce (or stop) the PAYE payment due to HMRC. Employers use an EPS to report: -- SMP, SPP, SAP, ShPP recovered from HMRC (103% or 108% for small employers) -- Employment Allowance claim -- CIS deductions suffered (reducing the PAYE bill) -- No payment due (if no employees were paid in a tax month) -- Final FPS indicator (when no more payments will be made in the tax year) The EPS must be submitted by the 19th of the following month (12th if paying electronically) to be taken into account for that month's PAYE payment. Deadlines and late filing penalties The FPS must be received by HMRC on or before the employee's pay date. If you pay weekly, you need to submit weekly. Penalties for late FPS submissions (more than 3 in a tax year trigger automated penalties): -- 1 to 9 employees: GBP 100 per month -- 10 to 49 employees: GBP 200 per month -- 50 to 249 employees: GBP 300 per month -- 250 or more employees: GBP 400 per month First year of employment (new employer): the first 3 late submissions are usually not penalised. Employee benefits Because HMRC receives real-time data, the personal tax account on GOV.UK shows each individual their income and tax in near real-time. This data feeds into Universal Credit assessments (DWP receives PAYE data from HMRC monthly) and helps HMRC issue correct tax codes more quickly. Final submissions At the end of the tax year, employers submit a final FPS (marked as the final submission) and issue P60s to all current employees by 31 May. Leavers receive a P45 at the point they leave. No separate end-of-year return (P35) is required under RTI.

Try the calculator