What is an RTI submission in simple terms

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Real Time Information, or RTI, refers to a key part of payroll processing where employers must report all payments and deductions to HMRC. It was first introduced to simplify the process for employers and increase the accuracy of HMRC’s records.

Below we’ve covered what RTI means in simple terms, and all the basics you need to know.

What is an RTI submission?

Employers must report on taxes and NI to HMRC as part of paying employees (i.e. running payroll). This was originally completed each tax year, but this changed significantly in 2013 when HMRC required employers to submit the information each time they pay employees. Hence the regularity of reporting, this is referred to as Real Time Information.

The intention of RTI is to keep HMRC in the loop of UK workers, especially those with multiple jobs, to ensure they’re paying the right amount. As there are multiple submissions each year rather than one, this keeps records more accurate and reduces the number of cases where someone is under or overpaying tax.

Employees also benefit from this in that if they are paying too much or too little, this won’t be one lump sum at the end of the tax year. For employers, it has reduced the painful task of submitting a lengthy tax return each year.

How is RTI information reported?

RTI refers to two types of reports: a full payment submission (FPS) and an employer payment summary (EPS). Both these reports can be generated and sent to HMRC using payroll software. Here’s what each report details:

  • The FPS is the standard report that includes all details of employees, payments, and deductions, as well as any new starters or leavers.
  • The EPS is used by employers to recover statutory payments like sick pay and maternity pay, plus other allowances. It is also used in replacement of an FPS if no payments have been made that month so HMRC don’t wrongly send a penalty.

What happens if RTI isn’t submitted to HMRC?

If RTI isn’t submitted on or before the date employees are paid, HMRC will penalise the employer. These penalties are automated, meaning there’s no way to avoid a fine for delayed submissions. However, it’s possible to appeal against any of HMRC’s penalties.

Luckily, all UK payroll software must be RTI compliant and it is relatively simple to submit these reports. As there are strict time restrictions with payroll generally, it’s important to keep software updated to prevent delays and ensure compliance. Cloud-based solutions like Codapay will automatically roll out updates to keep up to date with new compliance requirements.

Update: RTI and the Coronavirus Job Retention Scheme

RTI became a hot topic in April and May of 2020 due to it impacting the ability of some workers to claim furlough payments during the COVID-19 pandemic.

Rishi Sunak, Chancellor of the Exchequer, announced that anyone who started a new job would only be eligible for the scheme if the new employer made an RTI submission to HMRC on or before 19th March 2020. As most employers pay employees at the end of each month and submit RTIs a few days prior to pay day, thousands of new starters were exempt from the scheme.

RTI is a way for HMRC to confirm employment and therefore check for any fraudulence or inaccuracies. This is why it’s also important for the processing of Universal Credit.

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