What's changed - PAYE
in real time
Unless HM Revenue & Customs (HMRC) has already notified you, all employers must report PAYE in real time. Each time you pay an employee you must submit details about employees' pay and deductions to HMRC using payroll software.
This guide gives an overview of the main changes.
On this page:
How the changes affect you?
You still operate PAYE in the same way but you must submit the payroll
information you keep to HMRC on or before the day you
pay your employees.
You use a Full Payment Submission (FPS) to do this.
Your payroll software will generate the new reports you need and
submit payroll information online. These include details of:
- the amount you paid your employee(s)
- deductions, such as Income Tax and National Insurance contributions
- starter and leaver dates if applicable
You need to include the details of all employees you pay,
including those who earn below the NICs Lower Earnings Limit (LEL),
for example students.
You no longer submit end-of-year forms P35 and P14 and the starter
and leaver process is simplified. You continue to give your employee
a form P45 (employee parts) when they leave but you no longer send
forms P45 (part 1) or P46 to HMRC. Instead you must report all starter
and leaver information via your payroll software each time you pay
Common forms you no longer need
Some of the main forms you will be familiar with are no longer used
for operating PAYE in real time.
The table below gives an 'at a glance' comparison of the changes.
Payroll software will include most of these new forms. You can find
out more about each new online form as you need it.
Forms P14 and P35 end-of-year returns - do
not use after you have submitted your 2012-13 return
FPS each time you pay employees
Employer Payment Summary (EPS) each month for any adjustments
to what you owe
Earlier Year Update (EYU) to amend details for earlier years
P45 - don't send any parts to HMRC - only use
for the employee's own records after 6 April 2013
Include starters and leavers information on
P46, P46(Pen) or P46(Expat) - do not use these
forms after 6 April 2013
Include starters and leavers on your FPS. You
can use the Starter Checklist to keep your own record
Form CA6855 to trace or check a National Insurance
number - do not use after 6 April 2013
Use payroll software to send a National Insurance
number Verification Request (NVR) to trace or check a National
Form P38(S) - do not use after 6 April 2013
Include on your payroll and in your FPS
How you submit your PAYE details
When you run payroll, your software gathers the PAYE information
you send to HMRC, based on the payroll entries you make. You can
use any commercial payroll software (there are some free
packages available) or HMRC's Basic PAYE Tools package which is designed
for employers with nine employees or fewer.
You submit your PAYE information online to HMRC using commercial
payroll software or HMRC's Basic PAYE Tools, if they are suitable
for you. You do this via the Government Gateway, the online entry
point to government services. You cannot use HMRC's PAYE Online Returns
and Forms direct from the HMRC website to send this PAYE information.
You may be able to use Electronic Data Interchange (EDI) if you
use commercial software. EDI is a dedicated connection or a secure
network more suitable for large employers with employees running
into the thousands. If you want to use EDI you must check if your
payroll software supports it.
Software packages and other payroll
EDI filing for large employers
Changes to PAYE Online for real time reporting
Employers reporting their payroll information to HMRC in real time use fewer features of PAYE Online than they did previously - you still submit reports online but these reports will be sent directly to HMRC using your payroll software or HMRC's Basic PAYE Tools.
You still need your PAYE Online login (User id and
password) because although you can't log in directly to PAYE Online
to report, you need your login details when your payroll software sends
your reports through the Government Gateway, which uses the same password
and user id as PAYE Online does.
Reports that cannot be submitted directly using
You cannot send HMRC any of these reports by logging in directly using PAYE Online:
- an FPS
- an EPS
- an Employer Alignment Submission (EAS)
- an EYU
- an NVR
- New employee information - you
mustn't send P45 Part 3, P46, P46 (Pen) or P46 (Expat) directly using
PAYE Online, even if this option is still visible from the left hand
- Leaver information - your payroll
software will send this - so don't use PAYE Online to send P45 Part
- End-of-year return - forms P35, P14 and P38A for
years 2013-14 onward
You can continue to login directly to PAYE Online
- send expenses and benefits returns - including
P46 (Car), P9D, P11D and P11D(b) - although this may be done directly
from your payroll software if it supports this feature
- receive tax codes and notices,
although you may choose to view these using the PDV, or your payroll
software if supported
- set up email reminders, and also view your current
- view National Insurance number verification requests and
replies - how you can do this is explained later in this
- view generic notification notices -
you can find out more about these notices in the guide 'Using
HMRC’s Online Service - PAYE for employers'
- appeal electronically against your 2014-15 late filing or late payment penalty
Using HMRC's Online Service - PAYE for employers
Other details you may need to submit
There are other submissions you may also make. These include:
- EAS to align employee records with HMRC records
before you submit other information. HMRC will tell you a date
you need to submit your employee details by. An EAS is only required
for existing employers with a:
- large PAYE scheme with over 250 employees
- payroll administered by two or more payroll systems, including
those operated by different payroll providers
- NVR to verify or obtain a National Insurance
number for new employees. When you send HMRC a request via your
payroll you will receive a reply which you can view through PAYE
Online, which will tell you if the number is right or not, or will
provide a number if you haven't got one.
- EPS to report a reduction in the amount you
pay to HMRC or if you haven't paid any employees in a pay period.
- EYU to correct, after 19 April, any of the year-to-date
totals submitted in your final FPS for the previous tax year. This
only applies to years after you started to send information in
real time. The first year an employer can use an EYU for is 2012-2013.
Please note, you cannot send an NVR until you have
started to send PAYE information in real time - wait seven days after
sending your first FPS before sending an NVR.
Getting your employee details ready
It's very important you use accurate employee details - such as full
name, home address, date of birth, National Insurance number and gender
- when you report your PAYE information in real time. By doing this
- ensure employees pay the correct Income Tax and NICs
- make it easier to match the information you send with HMRC's record
of your employee
- reduce the number of employee queries you receive from HMRC
The best way to check these details are correct is to verify them against a birth certificate, passport, driving licence or official document from HMRC or the Department for Work and Pensions.
Improving your payroll data
What has not changed
The following are unchanged for reporting PAYE in real time:
- PAYE - PAYE remains the same. It is only the
reporting that has changed.
- Coding notices - employers can still choose
how they receive coding notices.
- Reporting a change to HMRC, for example updating employee's
new name or address for HMRC records - a real time submission
does not update HMRC records. It is still the responsibility
of the individual employee to notify HMRC of changes of name,
address and so on.
- HMRC messages to employers - HMRC is continuing
to use the Data Provisioning Service (DPS) and EDI outbound message
- Payment dates - payment dates to HMRC remain
- Forms P60 - P60s remain the same.
- Expenses and benefits - real time reporting
has not changed how expenses and benefits are reported. Employers
continue to complete and file any forms P9D, P11D and P11D(b) due.
- The Construction Industry Scheme (CIS) payment and reporting
process - real time reporting has not changed the CIS
process. Employers continue to complete and file monthly returns
(CIS300) due under the existing CIS arrangements. But, where
a limited company acting as a subcontractor has suffered CIS
deductions, they report these amounts to HMRC on an EPS and subtract
these from the amount of PAYE due to be paid to HMRC.
Real Time Information (RTI) main changes and the effects on CIS