Preparing to operate
PAYE in real time
From 6 April 2013 employers started reporting PAYE information to
HM Revenue & Customs (HMRC) in real time. You may see this referred
to as Real Time Information - or RTI.
This means that employers (or their accountant, bookkeeper or payroll
bureau) have to:
- send details to HMRC every time they pay an employee, at the time
they pay them
- use payroll software to send this information electronically as
part of their routine payroll process
You need to take several actions to prepare for operating PAYE in
real time, which are set out below. Decide which actions apply to your
business - you can use the checklist provided to tick them off as you
Get/update your software or use a payroll provider
To be ready to report your payroll information each payday you must
do one of the following:
- get payroll software if you don't already have any (some packages
- update your existing payroll software to a version with this functionality
(your provider can advise on this)
- use a payroll provider (such as an accountant or payroll bureau)
to do the reporting for you
For help in picking a solution that suits your circumstances, read
the guidance on choosing a payroll option for real time PAYE.
Software packages and other payroll options
Check employee data is complete
Before you change to reporting PAYE in real time it's important
that the data you hold in your payroll records is complete and accurate.
You must check and, if necessary, update the data for all your employees
or pensioners - certain details are essential such as name, date
of birth and National Insurance number, and must be in full and be
Getting your payroll
data right first time
Check you are registered for PAYE Online
You are probably already registered for PAYE Online and have a user
ID and password for PAYE Online - if so, you can skip this step. But
if you're not registered yet, and you're responsible for your own payroll
reporting, then you will need to register for PAYE Online because:
- PAYE Online is how you may still send certain forms to HMRC
- if an employee tax code changes, PAYE Online is one of the ways
HMRC will tell you
- to send your payroll reports to HMRC, your software will need your
PAYE login details
Changes to PAYE Online for real time
Include new information in your payroll records
When you report your payroll information in real time, you will
need to send certain information that you may not already keep on
your payroll system. So you'll need to inform your staff and change
your processes to collect this new information - although you may
not be able to include it in your payroll records until your payroll
software is compatible.
Information will be needed about approximately how many hours your
employees normally work in a week.
Notifying and getting
new employee information right
Lower paid, temporary, irregular and casual staff
You'll need to report payments to all staff no matter how much you
pay them, even those earning below the Lower Earnings Limit or those
paid just once a year. So you'll have to enter details of these employees
onto your payroll system. Be sure to get their employment status
If appropriate, set the irregular payment pattern indicator so HMRC
doesn't assume that they've left your employment just because they
haven't worked for a while.
or agency workers
Recording changes to employee working patterns
As well as recording additional information when you first take
a new employee on, you may need to make changes to an employee's
payroll record in certain circumstances.
For example, if an employee takes unpaid leave you need to set an
irregular payment indicator when you make their final payment for
that period or HMRC will assume that they've left your employment.
Employee changes and events
You won't report new starters to HMRC separately any more. Their
information will be automatically sent when you report your payroll
information. So you'll need to have processes ready to collect and
record the correct personal information from new starters. This information
can be gathered and stored however you prefer - letter, email or
a form. HMRC has a Starter Checklist you can use but this form, or
any other records you keep, must not be sent to HMRC. You must keep
your records for the current year and the three previous tax years.
Download the optional
form Starter Checklist (PDF 742K)
You won't report leavers separately any more. You must continue
to provide a form P45 to employees who leave - but don't report
the P45 part 1 information to HMRC using PAYE Online for employers
any more. Instead, set their leaving date on their payroll record
so it will be automatically reported next time you send your payroll
When an employee leaves
Have contingency plans ready in case of computer and/or other failures
or problems, such as a loss of your internet connection. There's
no facility to make your payroll reports via email, or by filling
in a form on a web page. But you can send in your reports in advance
of the actual payday.
What happens if you don't
report payroll information on time
Action if you pay your employees via Bacs
If you pay your employees directly into their bank accounts via the
Bacs system (Bacs is not the same as internet banking) using your own
Service User Number (SUN) you must check that your payroll
software includes the RTI (Real Time Information) cross-reference (sometimes
called a 'hash') field.
If you pay without using your own SUN you
will not need the hash reference even if you pay via Bacs.
More information about the cross reference (hash) field
This field is for a four character reference that you will need when
you submit a Full Payment Submission (FPS) and send your Bacs payment
instruction. If you use a Bacs Approved Bureau (BAB) you should check
with them now to make sure they will be able to supply the reference
for this field on your submissions in time for your first FPS.
This reference (or hash) is needed so that HMRC can match the payments
employees receive with the payroll data you report in real time. Each
employee must have a unique reference and the reference must be in
a format starting with '/' to show it is an RTI payment, and then have
a further three characters.
Be ready to update HMRC with your latest payroll
When: At or before the time you send your first
report to HMRC.
To make your first PAYE real time payroll report successful, the
data that HMRC holds on your employees must match your payroll data.
When you change your payroll to PAYE in real time you'll need to
send HMRC information about every employee who's worked for you in
the current tax year, even if they've already left your employment.
So when you start reporting payroll information in real time in the
2013-14 tax year, you should have new software and procedures in
place before you pay anyone - so that all the necessary information
is stored in your payroll system ready to be reported.
First report - checking
your payroll records match with HMRC's
Start reporting your payroll information
When: HMRC invited a number of employers to participate
in a pilot during 2012-13. But most employers started to operate
their payroll in real time in April 2013.
The date you should start sending your PAYE information in real time
is on the letter HMRC sent you. You cannot send any real time information
reports until this date. If you do they will be rejected.
Once you've followed all the previous steps, you'll be in a position
to start reporting your payroll information.
Reporting your payroll information
You'll need to report your payroll information electronically, on
or before any day when you pay someone. This will normally be carried
out by your payroll software (or your payroll provider) at the same
time that the payments are calculated, or just afterwards.
So you'll have to review the processes throughout your organisation,
to check that you'll have the information you need to record and report
it, on time - whether weekly or monthly.
It's important that the information you provide on these reports is
right - if it's wrong it will cause you and HMRC problems, and your
employees might be affected too.
Sending payroll information to HMRC
Information you must get
right when running your payroll
Download guidance on when you can report payroll a few days late (PDF 28K)
Relaxation of reporting arrangements for small businesses with
fewer than 50 employees
Until 5 October 2013, employers with fewer than 50 employees, who
find it difficult to report every payment to employees at the time
of payment, may send information to HMRC by the date of their regular
payroll run but no later than the end of the tax month in which the
payments are made (a tax month always ends on the 5th of a calendar
Relaxation of reporting arrangements for small businesses with fewer
than 50 employees
Know where to go for extra help
When: Now and at regular intervals.
Any important news relating to PAYE and payroll operation is published
on HMRC's Employer PAYE news and updates page. There are typically
at least a couple of items published every month, so checking on
it as part of your monthly routine is a good idea.
Employer PAYE news
YouTube (a video sharing website)
If you want another way to familiarise yourself with what you need
to do to get ready, you might want to look at HMRC's video 'Get ready
to operate PAYE in real time'. It's available to view anytime that
suits you. The video covers all the same tasks as this guidance and
will help you to prepare for reporting PAYE information to HMRC in
It’s simple to view - it’s hosted on the HMRC YouTube channel.
to the 'Get ready to operate PAYE in real time' video (Opens new
Live online question and answer session (webinar)
HMRC recommends that you watch the recorded online video (details
above) first. Then, if you have questions, please join one of the
live question and answer sessions. The live online sessions have
a maximum capacity of 500 people for each session, but there are
several sessions a day.
Before you start you need to check you have the right computer software
and then register in advance.
PC users need: Windows® 8, Windows 7, Vista, XP,
2003 Server or 2000.
Macintosh users need: Mac OS® X 10.4.11 (Tiger®)
Registering is simple - you only need your name and email address
View the available times
and dates for live Q&A sessions
Free live face-to-face events
HMRC are hosting a series of face-to-face sessions across the country
to give employers the chance to ask experts about RTI. These informal
events are friendly and relaxed in style and have proven very popular
There are several sessions in each location, at various dates and
times. Please call 0845 603 2691 to reserve a place
on a session at a date and time that suits you.
Find out where and when these sessions will be held, and more about
how to book.
HMRC Real Time Information (RTI) Events