What RTI means for HR and Payroll Staff

What is RTI (Real Time Information) all about? Has it been implemented just to frustrate HR and payroll staff, or is there more to it? Is RTI really as complicated as it seems to be, and what does it really mean?

Here, we’ll address what Real Time Information means for HR and payroll staff, and in turn what it means for business owners:

A Bit of Background Information

Since 1944, the Pay as You Earn (PAYE) system has been used for tax payments.

The tax that you owe had, from 1944 until 2013, been calculated in advance based on a prediction about what you’d be earning over the course of the year. Your tax code would be used to set the amount of tax that you’d pay, and you didn’t pay month by month. Instead, your tax would be split between the twelve months of the year. If you then left your job, you’d have to claim some back. Alternatively, if you ended up earning more than expected, you could be landed with an end-of-year tax bill.

What You’ve Heard So Far

It’s likely that you’ve heard business owners complaining about RTI and the extra effort that they have to make (or, at least, the extra money that they’ll need to pay to their accountant). Real Time Information is seen as a headache for employers, HR and payroll staff, but for the average employee it’s a positive that ensures that they won’t pay too much tax. Admittedly, the RTI system also dramatically reduces your chance of getting an exciting tax repayment cheque in the mail.

How Does RTI Work?

Think of RTI simply as a more frequent form of PAYE. Nothing has changed except for the fact that payroll and HR staff must send data to HMRC every time they pay their employees, rather than once a year as they submit their annual tax return.

This means that some employers are potentially sending data every week, whilst most are likely to send it every month.

What Does It Mean for HR and Payroll Staff?

HR and payroll staff shouldn’t have too much trouble getting used to the process, and should by now have settled into submitting data more often.

HR staff will need to make sure at all times that the information they hold about each employee is completely up to date. It’s more important than ever that they know if an employee’s name or address has changed, and that they have the correct NI number and date of birth on record.

For payroll staff, it’s a case of using RTI compliant software that will submit the data to HMRC. Payroll staff will need access to a good broadband connection in order to send over all the necessary data. This means that some have had to upgrade their payroll software or purchase new software in order to stay up to date, and that companies previously using a slow internet connection might have had to upgrade their connection.

Do you understand the Real Time Information process? How has your company adapted, and do you see it as a good thing or an unnecessary complication? Comment and share your opinion.