Real Time Information (RTI) is being introduced to improve the operation of PAYE. It will make the PAYE system easier for employers and HM Revenue & Customs (HMRC) to operate, and employees will receive information more quickly. It will also help support the introduction of Universal Credits.
The fundamentals of PAYE are unchanged, for example, use of codes, employers deducting tax and National Insurance. What RTI does change is how and when employers and pension providers report information to HMRC.
On this page:
Q: What will RTI do?
A: Using RTI, employers and pension providers will tell
HMRC about tax, National Insurance contributions (NICs) and other deductions
when or before the payments are made, instead of waiting until after the
end of the tax year.
RTI will:
Employers and pension providers will send this information to HMRC online for payments made to all their employees including those paid below the National Insurance Lower Earnings Limit.
Q: How does RTI support the payment of Universal Credits?
A: RTI will support Universal Credits by providing the
Department for Work and Pensions (DWP) with up to date information about
claimants' employment income, enabling them to calculate Universal Credits
payments without the need for claimants to supply employment or pension
income information.
Q: Why change the PAYE system?
A: RTI will enable HMRC to improve the way that the PAYE
system operates and builds on the work already done with the introduction
of the National Insurance and PAYE Service (NPS).
Under the current PAYE system employers tell HMRC what deductions they have made from employees pay after the end of the tax year. Only then are HMRC able to review whether the correct deductions have been made under PAYE.
With RTI, HMRC will be receiving information when, or before payments are made and will be better able to ensure the correct deductions are made from pay. This will mean more employees will pay the right amount of tax and National Insurance in the tax year.
Q: How will RTI be less of a burden?
A: RTI reporting will become an integral part of an employer's
normal payroll activity. When employers run their payroll the payroll
software will gather the information required and send it to HMRC. This
will be done using the internet through the Government Gateway or by using
Electronic Data Interchange (EDI) on or before the date payment is made.
There will be transitional costs of introducing RTI but analysis indicates the system will be cheaper for employers and HMRC to operate once it is bedded in.
For HMRC it will mean that there are fewer individual customer records needing an end of year recalculation to determine what underpayments or overpayments have arisen.
Q: What does RTI mean for HMRC?
A: For HMRC it will mean that there are fewer individual
customer records needing an end of year recalculation to determine what
underpayments or overpayments have arisen. Once RTI has bedded in it is
likely that HMRC will be able to do more in-year PAYE work.
Q: Does RTI apply to the self-employed?
A: No - it is for the operation of PAYE only
Q: Will employers report all payments as part of their normal
payroll activity?
A: Yes, employers and pension providers will send details
of all payments made through the payroll irrespective of the amount of
pay or pension.
Q: Will employers have to complete a form P46 when taking on
a new employee who doesn't have a P45?
A: No, employers will not have to complete a form P46
and send it to HMRC. But they will need to obtain the P46 information
from the employee and use it to complete the starter information which
will be sent as part of the RTI payment submission, with details of the
employee's first payment, when the payroll is run.
Q: Will employers use the form P38A (employers supplementary
return) using RTI?
A: No, employers and pension providers will not need
to complete an end of year return (P35 and P14) or P38A supplementary
return, as they will tell HMRC about all payments made each time their
payroll is run.
Q: What will employers have to do at the end of the tax year?
A: Employers and pension providers will be expected to:
Q: When will it happen?
A: Employers and pension providers will begin to use
the RTI service in the period April 2013 to October 2013. All employers
will be using the RTI service by October 2013.
Q: I run a manual payroll for eight employees. What do I have
to do for RTI?
A. Using RTI, you will tell HMRC about tax, NICs and
other deductions when or before you pay your employees, instead of waiting
until after the end of the tax year. You will need to send this information
to HMRC online before or at the time the payment is made.
If you are a small employer (ie with nine or fewer employees) you can use either the free HMRC Basic PAYE Tools package or commercial payroll software which will allow you to submit the data to HMRC when you complete the payroll.
We recommend that employers with more than nine employees use more appropriate software available from commercial software providers.
Q: Will forms P35, P14 and P38A be needed using RTI?
A: No, end of year returns (P35 and P14) or P38A supplementary
return will not be needed as employers will tell HMRC about all payments
made during the tax year each time their payroll is run.
Q: How will I report using RTI?
A: Using RTI employers and pension providers will send
HMRC a 'Full Payment Submission' (FPS) detailing tax, NICs and other deductions
when or before the payroll is run.
The information needed to complete the FPS will be collected by your payroll software and sent to HMRC automatically online.
Q: When and how will I be informed about reporting using RTI?
A:Before you can report using RTI all PAYE Schemes must
undergo employer alignment. Employers will receive details from HMRC about
the date they need to submit either an Employer Alignment Submission (EAS)
or their first FPS.
Q: What is a Full Payment Submission (FPS)?
A: An FPS is a new type of submission that will be submitted
over the internet via the Government Gateway or - for those using it -
the Electronic Data Interchange (EDI).
Q: What is included in a FPS?
A: For the first FPS, employers should
include all employees who have been employed during the current tax year,
including starters and leavers, or those that have not yet received a
payment in the relevant period.
If they prefer, employers can submit this FPS for each 'part' of their payroll, for example one first FPS for weekly pay; one for monthly and a separate FPS for leavers.
The first FPS should also include the hours normally worked, that is, the number of hours a person is expected or regularly works in a week.
Q: How will subsequent FPSs differ from the first FPS?
A: The 'first' FPS must show all employees who have been
employed with you during the current tax year, even if they have left
or have not been paid in this period.
The second and subsequent FPSs will only contain pay and deduction details for those employees paid on that payday. You don’t need to include employees that are not being paid.
Q: Will subsequent FPSs need to include 'suspended' employees
(eg sabbaticals or on nil pay) or do they run risk of having employment
ceased after three months?
A: You must set the irregular payment indicator on the
FPS for employees who do not get paid regularly.
If an employee is to be paid on an irregular basis, or not paid for a period of three months or more (for example takes a leave of absence) you must set the irregular payment indicator on the last FPS before the start of the period in which they won't be paid.
If the irregular payment indicator is not set, HMRC will check if employees have not been paid for a specific period of time and will treat them as having left that employment.
Q: Why does an FPS include the hours worked?
A: The hours worked is required
for the purposes of calculating Tax Credit payments.
Q: Can I submit multiple FPSs?
A: Yes
Q: Can I make three weekly RTI submissions on the same day
due to payroll staff going on holiday?
A: Yes. Each FPS should include the correct payment date
for the payment being reported. It must also include accurate year to
date figure for the time that the payment will be made.
Q: We have two 'pay runs' per month which are expense reimbursement.
How can we identify that these payments are totally non-taxable and
not liable to NIC?
A: You do not need to report these expenses payments
using RTI if they are 'totally non-taxable and not liable to NICs'.
Q: How will I know whether I need to submit an EAS or First FPS to complete Payroll Alignment?
A: You will submit an EAS if:
If your PAYE scheme does not fall within the above:
Q: How soon after the EAS will the employer be permitted to send
in their first RTI submission?
A: Once the EAS has been successfully submitted the employer
is considered to have joined RTI and they can start sending FPSs immediately.
Q: What is an Employer Payment Summary (EPS)?
A: An Employer Payment Summary (EPS) can be sent if:
Q: Do I need to submit an EPS whenever I run my payroll?
A: You will only need to submit an EPS where the circumstances
detailed in the answer to the question 'What is an Employer Payment Summary
(EPS)' above apply.
Q: When do I send the EPS?
If you want the deduction to apply to a specific tax month, you'll need to send the EPS by the 19th of the following tax month. For example, if you wish to inform HMRC that you are recovering some money for the June tax month (06 June to 05 July), the EPS showing these details must be received in HMRC before 19 July. If HMRC does not receive the EPS until 20 July it will apply the reduction to the July tax month. Once you've sent an EPS to HMRC, they can then offset the amounts you want to recover against the payments you're due to make.
Q: How will HMRC treat statutory payments shown on an EPS?
A: If you have claimed an advance of statutory payments then
the amount you report on an EPS will be set off against the advance you
have claimed. If not, then HMRC will deduct the statutory payment on an
EPS from the PAYE due as reported on an FPS. If there is no PAYE due then
the credit will be used against any other amount due, or if nothing is
due you can contact HMRC and claim a repayment or reallocation.
Q: What do I have to pay HMRC if I submit an EPS after the
19th of the month?
A: HMRC will expect you to pay the full amount due from your
FPSs for that tax month. HMRC will apply the EPS deduction to the following
tax month.
Q: Will the last submission in the year be any different to
the preceding submission?
A: When you send the last submission for the tax year you must:
Q: What is the position when an employer pays their weekly staff in week 52 or monthly staff in month 12, and submits an FPS with Final Submission Fields included, but then needs to make an adjustment for either month 12 or week 52, for example if they:
Should this submission also include the Final Submission fields,
or does this have to be made as an EYU submission?
A: If the amendment is identified:
Up to and including 19 April in the following tax year:
On or after 20 April in the following tax year:
Q: An employer pays his weekly staff in week 52 and submits an FPS with Final Submission Fields included. The employer then realises that an EPS should have also been submitted to reclaim CIS deductions suffered.
Should the EPS include the Final Submission fields, or does this
have to be made as an Earlier Year Update (EYU) submission?
A: If you have reported incorrect information on an EPS in a
previous tax year, you should submit another EPS for that tax year to
report the correct total year to date figures.
Year to date figures on an EPS are not reported on an EYU.
Q: I pay my employees monthly, which is when they receive their
payslips. However, I also make 'interim' payments mid-month, when I pay
my employees a proportion of the net pay they would otherwise receive
at the end of the month. Do I need to send an FPS for these interim payments?
A: Using RTI, every payment an employer makes which is subject
to PAYE will need to be reported on an FPS. As is currently the case,
if the mid-month payment is an advance, then PAYE should be operated at
the point it is paid. Using RTI the pay and deductions must be reported
to HMRC on an FPS on or before the time of payment.
You can find guidance explaining when you need to operate PAYE by following the link below:
Read EIM42280 - Employment income: basis of assessment for general earnings
Q: Will I have to make a RTI submission even if I haven't paid
anyone?
A: If no payments are made within a pay
period, an EPS should be submitted to indicate 'No payment due as no
employees or subcontractors
paid in this pay period'.
Q: I normally pay HMRC quarterly. If no payment is due to HMRC
for a particular month in that quarter, what should I submit (if anything)?
A: If you are classed as a quarterly payer, you must submit either
an FPS or EPS showing 'no payments are due this month' for every month
for which you have no payments due.
If you do not, then HMRC will specify an amount due, and pursue this at the end of the relevant quarter.
Q: Can I advise HMRC that I am not going to have any employees
for a specified period?
A: Yes. You can submit one EPS to advise us of your 'period of
inactivity'. HMRC will not expect any other return, nor any payment, for
the period(s) reported.
Q: Can we provide HMRC with actual hours worked?
A: No. We require that hour data is submitted by bands.
Q: How will hours for employees on contract lengths of 34 weeks,
45.9 weeks, and 49 weeks be reported?
A: Enter one of the following four bandings that is most appropriate
to your employee, based on the number of hours you expect them to normally
work in a week:
a. Up to 15.99 hours
b. 16 - 29.99 hours
c. 30 hours or more
d. Other
If your employee is on paid leave - for example annual leave or sick leave - please report the normal hours worked. If you consider a, b or c are not appropriate then enter d 'other'.
Q: Is an employer required to submit RTI returns if they do
not currently submit PAYE returns and do not have any employees earning
above the Lower Earnings Limit (LEL)?
A: If an employer is operating PAYE then using RTI they will
have to tell us about payments of earnings to all employees, even where
an employee earns less than the LEL. This is a change from now, where
employers do not have to maintain a P11 if someone earns, for example,
£20 a month.
Reporting details of employees earning below LEL is required to:
Where an employee earns less than the LEL and the income is not required to be reported under PAYE, the individual will be expected to inform DWP of their earnings. As part of Universal Credit, DWP will have alternative processes to collect information about income that is not reported through RTI.
Q: What will I need to do when a new employee starts?
A: Using RTI employers will be required to ask new employees
a series of questions - similar to the current P46 questions - depending
whether the employee has a P45 from their previous job to establish the
correct tax code to apply.
Where the employee supplies a P45 the employer should use the tax code and previous pay and tax details from that to calculate the tax to be deducted (as they would now). The code from the P45 should be included on the FPS with the answers to the P46 questions, but the pay and tax from the previous employer should not be included.
Please note that employers who are filing RTI should not send forms P45 or P46 to HMRC as the starter and leaver details will be reported to HMRC as part of their normal RTI submissions.
Q: How will the system cope with an employee who resigns and is
rehired in the same month with two corresponding payslips (two separate
contracts)?
A:The system will count the two employments as separate by operating
on the information submitted by the employer. The last payment from the
first employment should have a date of leaving. The first payment from
the new employment should include the starting information including start
date and should not take into account pay and tax information from the
previous contract when calculating the year to date figures. If the employer
is using payroll ids they must ensure the second contract is set up using
a different payroll id.
Q: What would happen if an individual had five positions with
the same organisation (for example, a local authority) and ceases four
but keeps one of these positions? How should this be reported?
A: Assuming that the five positions are treated as separate employments
and tax and National Insurance are calculated separately for each employment,
as each finishes a leaving date should be sent as part of the relevant
FPS. HMRC will, if necessary, issue a code each time.
If the earnings from all five jobs are accumulated and tax and National Insurance are calculated as one employment (ie there is one tax code in operation) no additional action needs to be taken until the last employment ceases.
Q: Reporting in a previous year - due to the limitations of
our systems, we will run the end-of-year reporting for 2012-13 at the
end of March 2013. We will then need to send EAS and the first FPS to
move into RTI also at the end of March for the first payments for the
2013-14 tax year. As you will receive feeds for the following tax year
early, will this be a problem?
A: We are currently looking into what we can do for April 2013
to allow RTI submissions to be made in advance of the year to which they
relate. We will provide an update once we have looked into this further.
Q: Reclaiming tax in previous tax years - can you clarify the
use of EYUs against the FPS for a previous tax year? What would you
expect for reclaims greater than two years? For six years following
implementation will we still need to do P14 submittals for the non-RTI
years which can be claimed on?
A: The EYU is needed to correct details of previous RTI years
- you will only be able to use it for the tax years where you were required
to operate PAYE using RTI. An FPS can only be sent up until 19 April following
the end of a tax year - after this any corrections need to be made on
an EYU.
Non-RTI years will still be corrected via amended P35/P14s as per the existing PAYE arrangement.
Q: Reclaiming overpayment of tax - will we still need to do
adjustments for previous years at the end of each tax year or can this
be done throughout the year? Each time we do a mini adjustment to the
client how are we reclaiming the tax?
A: Adjustments can be made throughout the year with the final
FPS showing the correct Year To Date (YTD) figures. If adjustments relate
to previous RTI tax years then the EYU is needed to show the correct details.
Q: I have claimed 'CIS deductions suffered' on my EPS: can
I have a refund of any excess?
A: Yes you can have a refund at the year end, and if there are
no outstanding debts.
Q: What will the new National Insurance number Verification Request
(NVR) do?
A:The NVR will enable you as an employer to:
The NVR cannot make a National Insurance number match for an employee under 16 years old or someone who has not yet been allocated a National Insurance number. It will also be unable to confirm a match if the information provided is insufficient and can be matched to more than one unique record.
Q: What will not change using RTI?
A: The following will remain unchanged:
Q: Will RTI change the CIS payment and reporting process?
A: RTI is not changing the existing CIS process. Employers will
continue to complete and file monthly returns due under the existing CIS
arrangements, although this will be via EPS rather than on a P35.
Q: Will RTI be able to handle Tax Free Pay?
A: Yes
Q: How can employers be sure the service will work?
A: To make sure that the RTI service is thoroughly tested
and issues resolved before April 2013, HMRC will pilot it with volunteer
software developers, employers and pension providers for a year, starting
in April 2012.
Q: How can employers be part of the pilot?
A: Plans for the April 2012 pilot are already well advanced
and no additional employer volunteers are needed. However HMRC are looking
at how to bring more employers on board later in the 2012-13 tax year.
Q: I act as an agent on behalf of a number of employers and currently
make all of their PAYE submissions for them. Do I need permission from
my clients before I could take part?
A: Yes. An agent would need to have the agreement of
the client employer.
Q: How were the pilot employers and software developers selected?
A: HMRC approached software developers to establish which
products they would like to include in the pilot. The software developers
then approached clients to see if they would be willing to volunteer.
In addition, some employers approached HMRC direct as a result of the
formal consultation.
In order to get the best of the pilot, it must be representative of a wide range of employers. HMRC used the following criteria to make sure that all significant types of employer are involved:
Q: How will employers send information to HMRC using RTI?
A: In April 2013 there will be two methods of reporting:
In addition to this, HMRC is working with the banking and software industries to develop - in the longer term - a service which will enable employers and pension providers who pay their employees or pensioners electronically (for example through Bacs) to send RTI alongside the payment instruction.
This would enable employers and pension providers who pay their employees or pensioners in this way to send RTI automatically at the same time as electronic payments are made to their employees.
HMRC will publish more information about this later in the year.
Q: Will I have to pay my employees though Bacs?
A: No.
Q: Can employers still use HMRC's Basic PAYE Tools?
A: Yes. HMRC is developing Basic PAYE Tools (HMRC's free
PAYE software for small employers) so that it is capable of RTI reporting.
Q: As well as HMRC's free HMRC Basic PAYE Tools, are there
any other free-to-use commercially available software products?
A:Yes - for a detailed list visit our Pay As You Earn (PAYE)
Recognition for payroll software and online forms internet page.
Q: Will submission of information via the Government Gateway
be a manual process, with the employer being required to log onto the
gateway and manually key the information, or is the intention to set
up an automated link from the payroll system to the gateway?
A:It is intended that employers will be able to submit their
information direct from their payroll. However, each payroll provider
will develop their own product.
Q: Can the Government Gateway handle the number of RTI returns
that will be made?
A: Yes, HMRC is confident that the Gateway can accommodate
RTI volumes.
Q: How will HMRC know the data is correct?
A: HMRC will work with employers to help improve data
accuracy - for example by identifying common errors or trends.
HMRC will also be undertaking a series of compliance checks after the employer has sent the data.
Q: What happens if software developers don't adjust their products
to support RTI?
A:We are working with software developers to ensure that their
products are updated to support RTI.
Q: Who will be testing the software?
A: HMRC is providing test services to allow payroll providers
to test their products. We are also introducing a new recognition process.
Software that meets our recognition standard will be listed on HMRC's
web page.
Q: What do I need to do to prepare for RTI?
A: HMRC recommends that you start to prepare for RTI by checking
the information you hold. More information about what you should check
can be found in the section 'Employee information - getting it right'
below.
Q: What is employer alignment?
A: Employer alignment is an important process that all
employers will need to undergo as part of the joining process for RTI.
Alignment will ensure the employer and HMRC both hold a consistent view
of the employees in every PAYE scheme before reporting using RTI begins.
Where an employer operates multiple PAYE schemes, each of these will go through employer alignment separately.
Q: What is included on the Employer Alignment Submission (EAS)
or the First FPS for employer alignment?
A: It is essential that the EAS or First FPS contains every current
year employee - even those that have left or have not yet received a payment
in the relevant period.
Q: Can an employer submit a further EAS with amendments?
A: It is essential that the information on the EAS is complete
and correct. Only the first EAS submission from an employer will be processed
as there will be no facility for an employer to make amendments. If any
employees are not included on an EAS, HMRC will consider them to have
left.
Q: Why is an EAS needed? Could the employer send in a full FPS
instead?
A: An EAS is required for large schemes to allow HMRC to separate
the alignment processing from the RTI processing and to avoid the risk
of alignment issues.
From April 2013, employers will be able to submit part EAS returns. HMRC will then run each part EAS against the full list of employees held.
Q: What is the definition of a 'split scheme'?
A: A split PAYE scheme for the purposes of employer alignment
is the situation where it is impossible or impracticable for an employer
to consolidate the full PAYE scheme into a single submission for alignment.
Q: How many names for an individual can we provide?
A:HMRC has three fields for names - first, middle and surnames.
Where present, HMRC would expect employers to provide correctly spelled
names in full (eg 'David' instead of 'Dave').
Q: If I submit a National Insurance number for verification
and it turns out to belong to someone else, will HMRC tell the employer?
A: If the National Insurance number provided on a FPS or EAS
is wrong, or no National Insurance number is provided, and we manage to
trace the correct National Insurance number for the Individual, we would
tell both the employer and the employee the correct National Insurance
number. We do not tell the employee about the results of any National
Insurance number Verification Requests submitted by an employer.
Q: How do I deal with the fact that a lot of software does
not allow you to proceed without a National Insurance number?
A: New RTI-compliant software should allow for the National Insurance
number field to be left blank if the National Insurance number is not
known, but you must provide the employee's address. However, wherever
possible, you should ensure that you obtain the correct National Insurance
number for your payroll records.
Q: How will the system deal with people who are either titled
(Lord/Lady etc) or have letters after their name?
A: Software providers will be asked to ensure this data can be
captured accurately - as it is now. Please ensure that these are clearly
separate from the surname.
Q: Currently when I need to submit information with a temporary,
blank or incorrect National Insurance number, HMRC will return the correct
National Insurance number to the provider. Will this continue using
RTI?
A: Using RTI, HMRC will attempt to trace the correct National
Insurance number from the employee identity data sent in and send it to
the employer or pension provider. If the National Insurance number is
not known, leave this data item blank. You should not use a made up number,
a default number or one belonging to someone else.
Q: If HMRC plan to monitor for each PAYE reference, will employers
or pension providers who continue submitting this type of temporary,
blank or incorrect National Insurance number data, for reasons beyond
their control, be penalised? Will there be some sort of initial appeal
mechanism such as reasonable excuse?
A: HMRC would prefer employers and pension providers have processes
in place to ensure they can obtain correct personal details including
the National Insurance number. It is not anticipated that HMRC will impose
penalties for missing or incorrect National Insurance numbers.
Q: Is a default date of birth, (01.01.1901), in such scenarios
is still acceptable?
A: You should not use a default date of birth. You should make
every effort to obtain the correct date of birth for the individual, especially
for new pensions coming into payment. Where, despite these efforts, it's
not been possible to obtain the correct details, please continue to use
the date of birth currently held on the payroll.
Q: What guarantees can HMRC provide about the accuracy of National
Insurance number information that they will send to providers?
A: HMRC will attempt to validate National Insurance numbers provided
by checking with the DWP. In cases where there is a discrepancy, or where
the employer has not provided a National Insurance number, HMRC will inform
the employer.
If the annuitant queries the National Insurance number provided by HMRC, the annuitant should contact HMRC to resolve the query.
The more accurate and comprehensive employee data the employer gathers and maintains, the more likely it is that the National Insurance number provided will be correct.
Q: Whilst employers and pension providers may request sight
of a passport occasionally to verify age, the actual passport number
is not recorded on our system and to do so would mean a costly rebuild.
Do I now always need to request this number?
A: The passport number will only have to be provided if the employer
or pension provider collect it as part of their checks that the employee
or pension recipient is entitled to work in the UK or receive a UK based
pension. HMRC is not asking employers to make large, expensive changes
to their business processes to allow them to report this information.
Q: Making submission of certain data items mandatory could
result in employers and pension providers having to implement costly
alterations to their new business acquisition processes, application
forms, training, etc. Is there any information on what data is mandatory
and which is optional?
A: HMRC has published the list of the data items on its internet
site, indicating which are mandatory and optional.
Q: Why is it important to check the details I hold about my employees
are accurate?
A: It has always been important to make sure the information
that you send HMRC about your employees is accurate to help ensure that
your employees pay the correct Income Tax and NICs. Improving the accuracy
of the information you hold and send to HMRC will help match the information
to the correct HMRC record. This could save you money by helping to reduce
the number of employee enquiries you receive.
This is not just important for tax and NICs. From October 2013, RTI will support Universal Credit by providing the DWP with up to date information about claimants' employment income. Ensuring your employee information is correct will help to ensure they receive the right amount of credit.
As part of the process for an employer joining RTI, HMRC will align the records of employees held on the NPS system and the records held by employers. HMRC will publish more information about the 'employer alignment' process soon.
In the meantime HMRC recommends that you start to prepare for RTI by checking the information you hold.
For more information and tools to help you improve the quality of your PAYE data, go to 'Improving your payroll data' - see the link below.
Q: Currently with other payments subject to PAYE (eg manual
income drawdown and wind up lump sum) notification is made to HMRC at
the end of the year. It appears that using RTI HMRC will require both
earlier and more information about the payee than would be currently
held by the insurer. Particularly this will be the case when it is a
one-off payment to the policyholder. For these types of payment will
any concessions be provided on the level of information required to
be submitted?
A: Using RTI, all payments subject to PAYE need to be reported using RTI on or before time of payment. HMRC would expect the insurer to know the payee's basic identity details (full name, date of birth and current gender) at the time the payment is made. Using RTI there will no longer be the need for the end-of-year return (forms P35 and P14).
Q: In a large number of cases providers pay annuitants by Bacs.
However for some one-off payments, such as trivial commutations, policyholders'
bank account details are not held. Payments are made by cheque. Are
these cheque payments to be included in the RTI proposals?
A: Yes. All payments subject to PAYE must be reported using RTI regardless of the method of payment (cash, cheque, Bacs, etc.) Only payments made by Bacs using the pension provider's Service User Number should have a 'hash' reported on them.
Q: Currently under SI1171 provisions, as triviality claims
are one-off payments there is no need for HMRC to provide details of
a tax code to be used in the following months. Is any change envisaged?
A: No change is envisaged. Use the emergency tax code on a week 1/month 1 basis when putting the trivial commutation payment through your payroll.
Q: At present there are no data item fields for trivial commutation
and de-minimis payments within the data items. Will these be introduced
and when?
A: These payments should be reported as taxable pay on an FPS. Data items to signal that a payment is a trivial commutation will be introduced in 2013-14.
Q: For our trivial commutation cases, what would an EAS need
to cover, if anything? We will have no way of predicting who will trivialise
so it is hard to create an EAS. Our assumption at the moment is that
for a trivial commutation scheme it would be a nil return on the EAS
and the first FPS would only contain the clients we have paid.
A: The EAS should also contain details of those who have been paid during the year - ie the details of everyone you would have completed a P14 for.
Read RTI: frequently asked questions for software developers - Payroll Alignment (EAS/First FPS)
Q: The actual method of pension payment could create potential problems. For example, cheques are used in a number of circumstances including:
In addition, it is not unusual to make a telegraphic transfer payment when a policyholder has made a specific request for immediate money or systems/processing delays have occurred rendering a pension payment potentially late.
Will there be a requirement to operate two different methods of RTI reporting, one for Bacs payments and the other via the Government Gateway or another route for all other methods of payment? Also using two routes gives potential for a non-balancing submission. How will HMRC treat this to ensure no penalty arises?
A: All payments subject to PAYE must be reported using RTI regardless of the method of payment (cash, cheque, Bacs, etc). All of these payment types can be reported using either EDI or the Government Gateway. Information about payments made via Bacs should also include the 'hash' so that HMRC can confirm that the amount reported matches the amount that has been paid to the individual.
Q: What National Insurance number should we use when pensions
are transferred to the dependent?
A: You should use the dependent's number, not the National Insurance number of the deceased.
Reporting changes that might affect your tax
Q: Payments made after death often occur as a result of a review, sometimes many years after the event. The tax due is determined using 0T tax code and, since a second P45 is not permitted, HMRC are notified by letter. What will the process be using RTI?
A: Payments after death will be reported to HMRC using RTI on or before time of payment on an FPS. Therefore separate notification by letter will not be needed.
Q: A majority of pension provider systems process and issue payments daily, simply because the number of products they are able to offer their customers means a number of different payrolls are run each day. Does this mean that using RTI information must be sent to HMRC on a daily basis (when the payroll is run) or would it be acceptable to store such data and submit it on an agreed basis, for example, weekly or monthly?
A: An employer or pension provider should report payments to HMRC on or before the time payment is made. Where the pension provider runs several payrolls, which may operate on different days, we would envisage receiving an RTI return every time each payroll is run - including on a daily basis if applicable.
Q: System Changes and Specifications: what should pension providers input as an 'Occupational Pension amount'? All annuity payments may not be appropriate as annuity payments are made from various other sources such as personal pensions etc.
A: Pension providers should include in the data item for the 'Annual amount of occupational pension' all occupational pensions, personal pensions and annuity payments subject to PAYE.
Q: Will HMRC produce separate sets of PAYE regulations for pension providers and employers?
A: No.
Q: Returned bank credits are a regular scenario for some annuity providers, where we issue a payment to a bank in good faith and this is returned to us because details have changed, are not recognised, or the client has died. This scenario may cause a variety of issues, should the payment need to be reissued.
As the payment will not credit we believe that Vocalink will not receive the three digit code, and thus HMRC will have a valid EDI feed with a Hash for this payment alone. We would reissue this payment as a manual payment: will the initial EDI act as your notification of payment and the Hash be ignored?
A: Yes
Q: In a few cases we make payments to charities as beneficiaries of a deceased's estates. For these cases we do not have data associated with an individual, for example, title, forename, gender, date of birth and National Insurance number. This means that we cannot comply with some of the mandatory data items on the EDI messages. What is the process to follow in such cases?
A: If payment of the pension will no longer be to an individual but to a body such as a charity - that is, a third party or non individual - then:
Q: Can pension providers use the EPS applicable to pension
providers be used to reclaim tax overpaid to the HMRC from previous
tax years?
A: There is currently no field on the EPS to claim tax overpaid in previous years. Instead, an EYU should be used to report adjustments to pay and tax for previous RTI years. For years before that pension providers and employers should continue to use forms P35 and P14.
NB the EPS is also needed to report if no payments have been made during the period. If an FPS is sent then an EPS is not required.
Q: As our annuity payroll is so big we pay each day. As such
we would be issuing an initial FPS and an EAS on the same day. This
seems a bit excessive. In this scenario would you really need an EAS?
A: Yes, we would need an EAS for any scheme with more than 250 employments. Any smaller scheme not submitting an EAS needs to include all employments on the scheme in their first FPS.
The EAS needs to contain details of everyone on the PAYE scheme for whom you would have submitted a P14.
Any employment on the PAYE scheme which does not appear on the EAS will be ceased on NPS. From an initial look, if different people are being paid every day on one PAYE scheme, this is a particularly good example of why an EAS is needed before any FPSs - we need details of people paid on Tuesday, Wednesday, Thursday, Friday, etc in the first submission, not just those paid on the Monday.
For more information visit our Payroll Alignment guidance:
Download 'Payroll Alignment' (PDF 80K)
Q: Due to the size of our payment book, we pay every day, however the most regular mode in which we pay is monthly. As we pay every day are we right to assume that we will need to send daily FPS's?
A:Yes, we require an FPS each day in this scenario.
Q: Where we lose contact with our client and retain payments until we can find them again, should we utilise the irregular payment mode and give you notification somehow?
A:Yes, you should set the irregular payment indicator where you consider that the 'employment' is still live, but you will not be paying them for a period of time.
Q: Returning payments - in what circumstances we would need to:
A:There is no concept of reversing an FPS. However, a new FPS can be sent with corrected, up-to-date Year To Date figures.
For further information, read 'Errors and Corrections to Payroll':
Errors and Corrections to Payroll
Q: Naturally there is a delay when it comes to advising of a death. This will throw up some scenarios that differ from day-to-day payment, eg:
For an annuity provider the normal reason for cessation of employment is due to death. Therefore would the final FPS normally be one where an adjustment to the previous FPS is reported at the same time as the final FPS?
A: This is fine. Enter date of death as date of leaving and ensure the final FPS comes with the correct Year To Date figures.
Q: We are always notified of a death after the event and we would almost always either need to claw back part of a previous payment or pay more. Would this constitute a payment after leaving?
A: It depends if you have already notified HMRC of the date of leaving on a FPS. If:
Q: As an annuity provider we pay through a variety of mediums, cheque, Bacs, TT, etc. As the only measure the HMRC is introducing comes with Bacs payments it will be impossible for the FPS messages we send to reconcile with data received from Vocalink. How will the data from Vocalink be used and what knock-on impacts will that have to us with regards to auditing and compliance checks?
A: HMRC understands that employers and pension providers pay people in lots of different ways. We are aware that we will have no way of verifying FPSs relating to payments made by other means.
Q: Do annuity providers need to record Earnings Periods?
A: Yes. This is a mandatory data item.
Q: Are you expecting a final FPS each year for annuitants?
A: HMRC will get the information we need through the regular FPS submissions, so there is no need for an additional 'final FPS'
The 'final submission for the year' data item is used to relate the last submission relating to the PAYE scheme rather than individual level (similar to the existing P35, rather than the P14). When you are confident you are submitting the last FPS of the year, you should indicate this on the final submission you make and complete the end-of-year declarations and questions. HMRC will take this as the 'final' indicator for every employment on the scheme.
Q: How does RTI affect me as an individual?
A: Generally, you probably won't see much if any difference in your working day. However, using RTI, employers and pension providers will need to ensure that their employee records are up to date. They will also send information to HMRC when or before they pay their employees. This better quality, more up-to-date information will mean that, over time, more people will pay the correct tax in-year.
HMRC will also have the RTI needed to support the introduction of the DWP's Universal Credit in October 2013. Universal Credit will need up to date information about employment and pension income from RTI so that the DWP can adjust claimants' welfare payments to reflect their circumstances.
Q: How does RTI support the payment of Universal Credit?
A: RTI will support Universal Credit when it is introduced by providing DWP with up to date information about claimants' employment income.
Q: If RTI supports Universal Credit I am concerned that it will affect the benefits I receive
A: Changes to means-tested benefits (including Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income based Jobseeker's Allowance and income related Employment and Support Allowance) will not happen until 2013 at the very earliest. Universal Credit is being administered by the DWP and they will tell you about any changes that may affect you well before they take place. More information can be found on their website.
Go to the DWP website (Opens new window)
Q: Will my employer have access to information about the Tax Credits I get?
A: No. Your employer cannot tell that you are getting Tax Credits.
Q: What happens if I leave my job?
A: Using RTI employers will still give leaving employees a form P45 showing their pay and the tax deducted.
Q: What happens if I start a new job?
A: Using RTI you still need to give your new employer the form P45 given to you by your previous employer so they can operate the correct tax code. You will also need to answer some new starter questions. Getting this information right is good for everyone and will help make sure the right amount of tax is paid, and get credit for the NICs you pay.
Q: What happens if I don't have a P45?
A: This has not changed. Your employer will ask you some new starter questions similar to completing a form P46 so they are able to operate the correct tax code. As stated earlier, it's really important to provide the right information for these questions.
Q: What additional information do I need to give to my employer?
A: Using RTI there is little change to the information you give to your employer. To help get your tax right and make sure you get credit for the NICs that you pay, you should provide:
Your employer will need to verify this information from an official source, such as your birth certificate, passport, driving licence or official documents from HMRC or the DWP.
Q: Does RTI mean that I won't need to tell HMRC about changes to my circumstances such as if I change my title, name or address?
A: No. It remains your responsibility to notify HMRC of any change in your circumstances
You still need to tell us about these changes, even if you've also told your employer, because when your employer updates their records, these updates won't automatically be passed to HMRC for data security reasons.
Q: Will I still receive a form P60 using RTI?
A: Yes. Employers will still provide you with a form P60 at the end of each tax year.
Q: How will RTI affect the tax I pay?
A: There is no change to the way PAYE is operated. However, using RTI, HMRC will receive more up to date information about your pay and tax. Over time we will start to use this information to help adjust more people's tax and NICs so they pay the right amount in-year.
Q: I get Tax Credits: how will it affect them?
A: RTI will be used to help us pay you the right money at the right time and to renew claims. We will use RTI for renewals from April 2014 but you still need to report earnings/income changes to us.
Universal Credit will replace tax credits between 2013 and 2017. Universal Credit will be administered by the DWP and RTI will be used as part of that system. More information can be found on the DWP website.
Go to the DWP website (Opens new window)
Q: I get Child Benefit: will RTI affect it?
A:Child Benefit will not be affected.
Q: What happens if I lose my job and need to claim Jobseeker's Allowance?
A: This will not change until the introduction of Universal
Credit by the DWP in 2013. You can find more on their website.
Go to the DWP website (Opens new window)
Q: Is there anything I can do to support RTI?
A: You can support the introduction of RTI now by making sure your employer holds your correct information. Please check your employer has your National Insurance number, correct date of birth, your full and official surname and forename(s) - not just your initials and has spelled your name(s) correctly.
The following questions and answers apply to all employers who make payment by Bacs, and their agents, such as Bacs Approved Bureaux (BABs), banks, and payroll software providers.
Q: What does HMRC regards as a Bacs payment for RTI purposes?
A: A Bacs payment is one that is submitted directly or indirectly into Bacs using an employer's own Service User Number (SUN).
If an employer has any doubts about whether they have their own SUN, they should approach their Bacs Accredited Software Supplier (BASS) or BAB.
Q: Will we be compelled to develop a Bacs route (where payments are made via Bacs) once HMRC's strategic solution is available. If EDI and the Government Gateway route provide HMRC with adequate information, will employers have to fund the development of additional systems to utilise Bacs?
A: HMRC does not intend to change the way employees are paid, or to force employers to pay via Bacs. To accommodate those employers who do not pay by Bacs, there will need to be an alternative means of submitting RTI once the strategic solution is implemented. This is likely to be the Government Gateway.
Q: What information will need to be added to Bacs payment instructions where the payment relates to RTI?
A: The employer or pension provider will need to include additional information in the Bacs payment file. They will include a four character entry in Field 7 (currently spare) of the Bacs payment file.
This entry will consist of an initial '/' to identify it as an RTI payment and three random characters, which will normally be generated by a customer's payroll software.
If you pay by Bacs under your own SUN (see the questions set out below), you will be obliged to do two things:
Q: How do I know whether I have to use the four character reference?
A: Payments by Bacs using the employer's own SUN will need to include the four character reference. This will apply to you if you answer 'yes' to all three of the following questions:
1. Do you make payments covered by the PAYE Regulations (eg wages/salaries/pensions?)
2. Do you make these payments using Bacs?
3. Have you been allocated your own SUN?
Q: What will Bacs do with Field 7 information?
A: When Bacs process the payment, they will use it and other information in the payment file to re-create the encrypted cross-reference and send it to HMRC.
This reference should be the same as the reference in the RTI submission you will have sent to HMRC.
HMRC will then match the cross-reference sent from Bacs with the information sent by you.
HMRC will not have access to the source information (such as bank account details).
Q: Are changes required to Bacs software if an employer pays using that method?
A: You should check if any changes are needed with your BASS or Bacs Approved Bureau.
Q: I pay others, such as suppliers, through Bacs - what will be the impact on those payments?
A: Any Bacs payments (Bacs Direct Credits or Direct Debits) you submit that aren't salary or pension payments won't be affected and will be processed as they are today.
Q: I pay my employees by cash, cheque or electronically using internet or telephone banking, but not Bacs. Do I have to use the cross-reference?
A: No.
Q: Is HMRC proposing to force everyone to use Bacs for making salary payments?
A: There is no question of HMRC forcing employers to use Bacs to make salary payments. Employers or pension providers who choose to make payments by other methods can continue to do so.
Where can I find out more about generating the cross-reference (hash) or the four character entry for Field 7?
A: Please read 'Real Time Information - Generating the RTI Cross-reference (RTI hash)' on our website.
Real Time Information - Generating the RTI Cross-reference (RTI hash)
Q: What happens if expenses go through Bacs after RTI has been sent?
A: If expenses which are not liable to tax or NICs are added to the payment after the RTI submission then RTI needs to be amended to reflect that the payment will now include an amount not subject to tax and NICs.
Q: I run my monthly payroll which generates payslips and payment instructions some time before the Bacs payments reach my employees' accounts. I frequently need to 'recall' or 'exclude' some of these payments before they are made due to information reaching payroll late, eg long-term sick. When this happens, we recalculate a revised payment for the employee, but do not rerun the payroll until the next month. How do I deal with this situation using RTI?
A: As now, using RTI employers must operate PAYE at the time that they make a relevant payment. They must also take reasonable care to report accurately to HMRC. In this scenario, the employer will have reported a payment, but some of the details were incorrect. If it is not feasible for the employer to run the payroll again, and supply the correct information at the time the payment is made, the employer should correct the employee's position in the FPS for the next relevant payroll run. They would do this by ensuring that the YTD figures are accurate in that FPS.
Q: Will the collection of student loans be part of RTI?
A: Employers will be required to report student loan deductions as part of the RTI FPS each time their payroll is run.
Q: Will RTI affect the way student loan deductions are calculated?
A: There is no change to the way student loan deductions are calculated.
Q: Will RTI change the way payments are sent to HMRC for student loan purposes?
A: There is no change. Employers will continue to send payments of student loan deductions to HMRC each month along with tax and NICs payments as they do now.
Q: What will I need to do when a new employee with a student loan starts?
A: Using RTI employers will be required to ask a series of starter questions - similar to the current P46 - of every new employee. One of the questions will be whether they are a student loan borrower. This question will be a requirement on employers irrespective of whether or not the employee provides a P45 from a previous employer.
Where the employee supplies a P45 including information about student loan deductions you should use this information, in conjunction with the starter questions, to begin student loan deductions immediately.
Q: If student loan deductions are reported to HMRC on a monthly basis will this information be passed to the Student Loan Company (SLC) on the same basis allowing student loan repayments to reach borrower accounts more quickly?
A: The introduction of RTI represents a major change for HMRC and employers and we want to make sure that it all works as we expect before making further changes. Once the new process is established we will consider opportunities to use RTI to improve the student loan process.
Q: If student loan deductions are not passed to the SLC on a real time basis why do they come using RTI?
A: One of the aims of RTI is to integrate PAYE reporting with payroll. Student loan deductions are part of payroll and part of PAYE reporting. Keeping them separate would be an additional burden for employers. As stated above, in the future we will consider opportunities to use RTI to improve the process.
Q: If an employee fails to tell the employer they are a student loan borrower will RTI be able to identify this and inform the employer to start student loan repayment deductions?
A:As now, employers should get the relevant information from the new employee. If this information is not provided by the employee then employers will be notified by HMRC that they should start to make student loan deductions for a new employee.
