Our top tips on getting ready for RTI
Although RTI is an automated process, with reporting to HMRC embedded into an employer or pension provider’s payroll software, you need to think about what RTI means for your organisation, how you run your payroll and your business processes.
1. Is your data is ready for RTI?
The first step of preparing for RTI is to check the information that you hold. HMRC state that over 80% of data quality problems are caused by holding incorrect information about an employee’s name, date of birth or National Insurance number.
Under RTI, the information that you submit to HMRC every time you pay your employees is matched against records stored on their National Insurance and PAYE Service (NPS). If the records don’t match, you may be creating duplicate or inaccurate records which could result in incorrect tax calculations or trigger HMRC compliance checks. So, wherever possible check the information you need from an official source.
Here are some important do’s and don’ts in recording employee information:
|Employee name||NI number||Date of birth|
|FACT – There were 507 submissions of employees called A.N Other submitted to HMRC and 572 people whose surnames only include the letter X ranging from ‘Mr X’ to ‘Mrs XXXXXX’!||FACT – There were 2,000 employee submissions with a National Insurance number of AB123456!||FACT – There were over forty employees over 200 years of age submitted!|
|Do – enter the employee’s full forename and surname.
Do – enter a double barrelled forename or surname in full.
Don’t – use known as, for example, if HMRC know the employee as ‘Robert’ don’t use ‘Bob’.
Don’t – enter an initial in either the Forename or Surname boxes.
|Do – only enter an employee’s correct National Insurance number.
Do – encourage them to check any documentation they may have received from HMRC or the Department of Work and Pensions (DWP). If they still can’t locate it, they can download Form CA5403 from HMRC, or they can phone the Registration Helpline on 0845 915 7006. If the employee has never been issued with a National Insurance number, they should phone Jobcentre Plus on 0845 600 0643.
Don’t – make up an employee’s National Insurance number.
|Do– enter the correct date of birth and ensure it’s in the format DD/MM/YYYY, for example 10/06/1985.
Don’t – enter a default date of birth, such as 01/01/1901, or make one up.
2. RTI, what are your options?
|“I want to continue using our own in-house payroll software”||“I want to use our existing payroll software package”||“I don’t want to make these changes myself”|
|If you have developed your own payroll software, it will have to be upgraded to collect any additional information you might need, and to send HMRC the necessary payroll reports.If you pay your employees using Bacs, it will have to add the extra information required in the Bacs payment instruction so that HMRC can match the payments they receive with the payroll data you report.||If you use a commercial payroll software package, then speak to your payroll software developer or provider to ensure that your software will be suitable – and if you pay your employees by Bacs, that the necessary changes will be made to your Bacs payments instructions.If this is not possible – perhaps because the package is too old, or the software vendor has no plans to support real time reporting – consider replacing it with a newer commercial package, or HMRC’s free Basic PAYE Tools package – but this can only be used to report your payroll information if you have a maximum of nine employees at any one time.||If you do not want to upgrade or purchase new software capable of handling the RTI requirements, or don’t have the internal resources, have you considered outsourcing to a specialist payroll provider?At Rouse Partners our payroll solutions have been designed with small to medium sized businesses in mind. Whether it is the first time you are considering outsourcing your payroll, or you are looking to reduce your admin we can help.|
We can help
We will ensure that our payroll clients have everything they need to stay compliant and we will support them through the transition. However, for many businesses with payroll systems in-house the new requirements may be an administrative burden with transitional costs to introduce a compliant system. This particularly applies to those with fewer than 50 staff and those without a dedicated payroll manager and payroll software.
With changing legislation, numerous deadlines throughout the year and the administrational time required, is it time that you considered outsourcing your payroll? We offer a flexible and cost effective payroll bureau service that will ensure that you comply with the RTI changes being made.
This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.