HMRC Real Time Information (RTI)

  • The current PAYE system relies on employers assigning tax codes and deductions to their employees during the year before submitting this information at year end.
  • Real Time Information (RTI) will enable HMRC to collect pay-related information each time employers run their payroll. Most companies of 50 or more employees are expected to be submitting by April 2013, with smaller (<50 employees) and some very large employers migrating to the system before October.
  • 92% of employees receive their salaries through the highly secure Bacs channel. It therefore makes sense to ensure the accuracy of pay related information by using this channel to submit HMRC RTI at the same time as the payment.

Make the RTI change simple with ePay »

Implementation

  • Initially RTI will be delivered via the Government Gateway or the Electronic Data Interchange (EDI) channel.
  • It is hoped that this will ultimately become a one stage process where RTI and payment files are delivered simultaneously through the Bacs channel. This is because EDI is unlikely to be available after 2017.
  • In the meantime, HMRC are looking to match the RTI file to the corresponding payment via Bacs, using the hash.

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Existing ALBACSip users that are confirmed pilot customers for HMRC RTI should contact us on 0870 081 8250 »

The Hash

  • Employers who currently pay their employees by Bacs, either using Direct Bacs software or via a Bacs Bureau, will need to generate a hash to link the RTI file to the payment file.
  • The employer's payroll solution will automatically generate the hash using pre-determined data. The hash consists of a randomly generated four digit cross-reference; the originating sort code; the destination sort code and the payment value.
  • The hash will be submitted with RTI data file, via the GG or EDI channels. 
  • The cross-reference will be included in the payment file that is submitted via Bacs.
  • On receipt of the payment file, VocaLink will recreate the hash and pass this information to HMRC.
  • HMRC will then match the hash submitted from payroll to the hash submitted with the payment file.

What this means for employers

  • Employers will now submit tax data along with their payroll run - whether weekly, fortnightly or monthly - rather than at year end.
  • Some software upgrades may need to be made. Employers must ensure that their payroll and payments solutions are able to support RTI.
  • The name, address, date of birth and gender of employees will be very important so employers should make sure that this data is clean and correct. We have produced a list of tips to help with the RTI transition.
  • Once the changeover has occurred, the time spent on payroll will be reduced - and HMRC has stated that the payroll process will become cheaper in the long run, thanks to Real Time Information.

Bottomline can help - our latest software is HMRC RTI compatible and ready to help save you time and money »

HMRC Timeline

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Additional resources from HMRC

An introduction for employers | Improving the operation of PAYE | Improving your payroll data

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