As a business, you’ve to hire a few or many employees to get things done and pay them salaries. RTI or Real Time Information for payroll helps companies stay on top of tax compliance and ensure their employees pay the right amount of taxes. If you’ve just started your business and don’t know much about RTI, or tax specialists have explained everything you need to know.
What is RTI and Why You Need It
Real-time information payroll was designed to improve PAYE (Pay As You Earn) submissions and simplify them. It was introduced in 2013 by HMRC to modernise the traditional payroll systems. RTI offers efficient ways for businesses and limited companies to submit their information to HMRC in real-time.
With the help of this platform, you can easily change and report crucial information like employee salary adjustments and file digital documents for payroll before paying them to make things a lot smoother. You don’t need to use the traditional manual methods and wait for days or weeks to make changes in employees’ salaries.
While RTI benefits businesses and employers, incorrectly using the system can lead to fines and penalties. Here’s how you can use it.
How To Use RTI System
RTI system requires software and access to the internet. You can use its software for free if you have less than ten employees. Otherwise, you need to get cloud-based software such as QuickBooks or Xero. However, it’s best to invest in such multi-functional software, even if you can access the free software, because they are much more efficient and offer many functionalities.
Make sure you have accurate and updated information in your systems. Any discrepancies in your records may trigger an HMRC investigation, or you might end up paying an incorrect tax amount. You can avoid this by checking employee details against official documents such as their driving license or passport.
Importance of Using RTI
Typically, employers used to wait until the end of the tax year to ensure all payroll submissions complied with HMRC’s requirements. With RTI, you can report at the same time or even before paying salaries, making things a lot easier for you.
These reports include Full Payment Submission (FPS). If you make statutory payments during a PAYE month, you need to report Employee’s Payment Summary (EPS). Doing this will ensure you don’t receive a penalty notice if HMRC expects an FPS. Using these submissions, HMRC calculates the correct PAYE you must pay. If any employer fails to submit these reports or misses a deadline, they will face penalties from HMRC.
To avoid all the hassle and penalties, you can outsource RTI and payroll services from us. At IBISS & CO, we offer accounting services and certified chartered accountants who will take care of all your payroll and legal obligations. In addition, they devise strategies that can help you avoid paying unnecessary taxes and save money.