RTI – Real Time Information – is coming for you.
You can wait until the government’s RTI requirements for small businesses with 50 staff and under kicks in April 2014, or take a more proactive approach – and embrace it now.
Under RTI, you as an employer and a pension provider must report the deductions and payments which you make to HMRC at the time they are made, rather than after the end of the tax year as was the case under the previous system. It is the biggest reform of PAYE since its introduction nearly 70 years ago.
The government began the overhaul for PAYE for businesses of 50 staff and above in April to coincide with the new tax year. Since then it’s thrown every type of business into a severe wake-up call as they are gradually getting their heads around the demands and new online forms.
According to HMRC, more than 1.4 million employer PAYE schemes have begun reporting in real time since the new system went live.
Here are three simple ways to get going with RTI, and by doing so avoid the pain and pitfalls of your bigger brethren:
1. Face The Future
Don’t bury your head in the sand. If you’re not familiar with the demands of RTI then it’s time to get familiar, and wise up to what the new changes are about. There’s plenty of information on the topic at HMRC website, which is a great starting point.
2. Know What RTI Demands
RTI will allow the government’s revenue and customs department to collect tax and other deductions every time you submit your payroll. You will have to legally submit tax data along with the contents of your regular payroll run – whether weekly, fortnightly or monthly – as opposed to the end of the year end and some software upgrades may need to be made. You must be in a strong position to ensure your payroll and payments solutions are able to support RTI – whether this is done in house or through a specialist outsourced payroll provider.
3. Build In Budget
There are reports circulating that RTI will mean an increase in time and budget devoted to this area of the business in order to get to grips with it. Stay calm, and bank in some extra budget to account for any peculiarities and familiarisation with the HMRC’s system. It might even be the case that the whole process throws up unforeseen or outdated practices from past years at your end which then HMRC then asks you to ‘tidy up’ in order for you to be fully compliant.