What is RTI Reporting and How Does It Work?
Tax reporting has always been a stressful obligation for many, but employers have an added responsibility to ensure the payroll for their employees is paid with the correct tax implications. It can get challenging, but whether you’re leading a small business or a Fortune company, there is one thing that can ensure you can stay on top of your tax compliance: Real-Time Information (RTI).
What is Real-Time Information (RTI) for Payroll?
On the 6th of April 2013, Her Majesty’s Revenue and Customs (HMRC) no longer requires employers to report their frequent reports of tax and NI payments at the end of every tax year. The new system follows real-time reporting, wherein employers can simplify the process by sending Pay As You Earn (PAYE) details to the HMRC as part of the routine payroll process.
Instead of anticipating long waiting times, RTI pushed the UK’s payroll system to a more straightforward format that is easy to follow and track as employers can regularly file payroll documents and make other changes before sending the payment to employees. With the help of the RTI system, UK employers find it easier to stay compliant.
What Do You Need to Include in Real-Time Information (RTI) Reports?
Despite the HMRC implementing the change more than a decade ago, many employers still don’t fully understand how RTI reporting works. If you’re still confused about what to report to the HMRC, you only need to focus on breaking down the report payroll information every pay period.
A standard RTI report typically includes details regarding the employees’ pay, tax, and deductions, along with added information involving employees who did not receive pay during the given reporting period.
All UK employers must submit RTI reports to the HMRC, though the only exception to the rule is if the employees’ pay is below the NIC Lower Earnings Limit of £120 per week and if their employment with you is their only source of income.
How Do You Use Real-Time Information (RTI)?
RTI marks the UK’s continuous progress towards the modern age as it requires employers to use RTI-enabled software and the internet to submit reports. Start-ups with less than ten employees are given free access to RTI-enabled software, but businesses with more than ten workers will need to invest in cloud-based software like QuickBooks, Xero, NetSuite, and more.
The Bottom Line: The Benefits of RTI Reporting and Why Your Business Needs to Maximize It
Real-time Information reporting makes it possible to streamline the employer’s payroll process and ensure every report made are compliant, accurate, and up-to-date. While it means sending monthly reports of all the information involving wages, salaries, PAYE, and National Insurance, it still helps lower administrative burdens by ensuring employers can provide higher quality information to the HMRC.
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