The Directors at McPhersons Chartered Accountants are pleased to keep Business in Hastings members up to date with regular, useful financial information. In the first of a new series of exclusive columns, Ainsley Gill focuses on Payroll and how smaller businesses are impacted by recent HMRC changes.
WHAT IS RTI?
On 6th April 2013, HMRC changed the way nearly all UK businesses report Pay as you Earn (PAYE).
Real Time Information, or RTI, is a new system that HMRC has introduced to improve the operation of PAYE. RTI does not change the way you calculate PAYE, it simply means you need to make more regular submissions. Each time you pay your employees you will need to submit PAYE information to HMRC, rather than just once a year at the end of the Payroll Year.
HOW HAVE THE RULES BEEN RELAXED FOR SMALLER BUSINESSES?
Businesses with fewer than 50 employees can benefit from a temporary relaxation of the Real Time Information (RTI) reporting arrangements. Until April 2014, employers with fewer than 50 employees who pay their staff weekly or more regularly and find it difficult to report at the time of payment may now send information by the date of their regular payroll, but no later than the end of the tax month (which is the 5th of the month).
HMRC has confirmed that for 2012/13, penalties will not be applied for inaccuracies found within the in-year Full Payment Submission (FPS). However, they may be charged after the end of the tax year based on the final FPS for the year. Penalties may also apply for inaccuracies found within the in-year returns for the 2013/14 tax year, using existing criteria. From 6 April 2014 there will be new late filing and late payment penalties.
WHAT ARE THE TEETHING PROBLEMS WITH RTI?
New Employees incorrect Tax Codes
For new employees, if the employee shows up on a later RTI submission, HMRC will treat them as a new worker and issue a tax code which may be incorrect as it won’t take into account their past employment record. If this happens, you should continue to use the previous code and call HMRC on 0845 300 0267 to correct the records.
What if an employee doesn’t have a National Insurance Number (NINO)?
You are allowed to submit a Full Payment Summary for employees without a known NI number. What is not allowed is to make up a number.
If an employee does not know their NI number they can submit a form CA5403 to HMRC.
What if there is nothing to report?
If there is nothing to report, you need to submit a nil Employer Payment Summary (EPS). This will avoid you being sent estimated demands.
This feature aims to give some informal hints and tips for small businesses. McPhersons Chartered Accountants will not be held responsible for any inaccuracies. For detailed advice, please contact McPhersons to arrange a consultation. on 01424 730000.
For additional information please visit the official RTI HMRC page here.