Real Time Information (RTI) ….. What to report

The rules for reporting wages, hours worked and payroll deductions  under real time information (RTI) are still being written.

What to report

RTI reports will need to be made where at least one employee is paid  above the lower earnings limit (LEL), (£109 per week for  2013/14). For wages between the LEL and the Primary threshold (£149 per week for 2013/14) the worker is given NI credits  although they don’t actually pay any NI, so the level of their wages  needs to be reported.   A major difference between RTI and the current system, is that once  the employer is reporting under RTI, reports must be made for each  employee even if no tax or NI are deducted for a particular period.  This because RTI has two functions; – to report deductions to HMRC  and to report net pay for each worker to the Department of Work and  Pensions (DWP) to allow the DWP to calculate top-up benefits such as  Tax Credits and the new Universal Credit.

The wages for employees aged under 16 are not required to be included  in the RTI report, unless those wages are so high that the worker will  be subject to income tax. Workers aged under 16 do not pay NICs, and  are not eligible to claim Tax Credits. 

Penalties for errors

The draft legislation released on 11 December 2012 indicates that  penalties for errors in RTI reports will apply from 6 April 2013, when  most employers will be required to start using RTI. Those employers  who are already in the RTI pilot programme may be subject to penalties  if their last RTI report for the 2012/13 tax year is incorrect.  In either case the penalties for errors in RTI reports will not be  collected until the 2013 Finance Act has been passed, probably in late  July 2013. This application of penalties from the start of RTI has  come as an unpleasant surprise, because tax and accountancy bodies  have been pushing for a ‘soft-landing’ for the RTI penalty rules for  all employers.

Penalties for late reports

Penalties for RTI reports which are submitted late will generally  apply from 6 April 2014 onwards. Remember an RTI report will have to  be filed every time employees are paid. Under the current system a  report of PAYE deductions is only required to be submitted to HMRC  once per tax year, by 19 May after the end of the tax year. Where the last RTI report for the tax years 2012/13 (for employers in  the RTI pilot) or 2013/14 is submitted by 19 May after the end of the  tax year, there will be no late-filing penalty. However, from 6 April  2014, where the employer fails to submit RTI reports on time within  the tax year, the employer could be fined for each month for which RTI  reports are late. Only one penalty per month will apply even if the  employer makes more than one RTI report during the month.