Having been slowly phased in since April 2013, HM Revenue and Customs (HMRC) announced last month that employers with fewer than fifty employees (small and micro business owners) will be required to start using Real Time Information (RTI) for each member of staff on their payroll from today, 6 March 2015.
The RTI system, which we’ve reported on extensively since it was announced over two years ago, is a new way for business owners to report Pay As You Earn (PAYE), with the hope that the new, real time method of reporting payments to employees will improve the accuracy of returns, ensuring that employers are paying the correct amount of tax.
Whether you own a small business or a micro business (the latter of which HMRC defines as a business with nine or fewer employees), you must start submitting your payroll information to HMRC in real time from today, 6 March. What this means is every time you pay an employee, whether they’re paid weekly, fortnightly, or monthly, you send the relevant payroll information to HMRC at that moment, rather than waiting until the end of the current tax year, as under the previous system.
In the last two years HMRC have made a number of allowances for small and micro business owners to allow them time to ease into the new system. Before today, small and micro businesses who would have otherwise struggled to report their weekly employee payments were granted the ability to report this information at the end of the month, allowing them to get a taste of the new system before being thrown in at the deep end.
However, as it’s now believed that all small and micro businesses have been given sufficient time to ease into the new system, this relaxation period is over, and small and micro business owners must start reporting all employee payments in real time from today, 6 March, or they’ll face receiving a monetary penalty.
Small business owners who are late in submitting employee payment information in real time are liable to receive a £200.00 penalty at the end of each month in which a submission is missed; with interest being charged on this amount should you fail to pay within thirty days.
Micro business owners face the same penalty terms, though they’ll only be expected to pay a £100.00 monthly penalty.
What to Submit
The document you’ll need to submit every time you pay your employees is a Full Payment Submission (FPS) document, which details all the payments and deductions you’ve made to each employee (deductions will include income tax, national insurance contributions, student loan payments, and so forth).
You’ll need to submit a new FPS every time a payment is made, with each FPS also detailing any new employees who have been brought into your business, or indeed any who have left since your last submission.
To speak with a professional to discuss implementing the RTI payment system in your small or micro business, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.