What's changed - PAYE in real time

From 6 April 2013 you must report PAYE information in real time. You may see this referred to as Real Time Information - or RTI.

Unless HM Revenue & Customs (HMRC) has already notified them otherwise, all employers 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:

Printable checklist - Getting your business ready to operate PAYE in real time

Use this checklist to make sure you can run your payroll correctly. You can print it off and tick each action as you go.

Download 'Business Readiness Checklist' (PDF 241K)

You must have a Portable Document Format (PDF) viewer installed on your computer before you can use a PDF form. HMRC recommends that you use the latest version of Adobe Reader software that's compatible with your computer.

Download the latest version of Adobe Reader (Opens new window)

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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 (NICs)
  • 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 someone.

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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.

Reporting PAYE before 6 April 2013

Reporting in real time from 6 April 2013

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 your FPS

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 Insurance number

Form P38(S) - do not use after 6 April 2013

Include on your payroll and in your FPS

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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 RTI-enabled 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 options

EDI filing for large employers

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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 - even though those features still exist for employers not yet operating PAYE in real time.

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 PAYE Online

You will not be able to send us 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 menu
  • Leaver information - your payroll software will send this - so don't use PAYE Online to send P45 Part 1
  • End-of-year return - forms P35, P14 and P38A for years 2013-14 onward

You can continue to login directly to PAYE Online to:

  • 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 tax position
  • view National Insurance number verification requests and replies - how you can do this is explained later in this guide

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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 is 2012-2013.

Please note, you cannot send an NVR until you have started to send PAYE information in real time - wait two weeks after sending your first FPS before sending an NVR.

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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 you will:

  • 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

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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 services.
  • Payment dates - payment dates to HMRC remain the same.
  • 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.

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