Real Time Information (RTI)
REAL TIME INFORMATION (RTI) – WHAT IT MEANS!
HMRC are in the process of sending out letters to all employers about RTI (Real Time Information) and the following is an explanation from our perspective as how it will affect you as a Taxing Nannies client.
RTI is a system to be introduced in 2013 whereby employers are required to provide HMRC with information regarding PAYE and national insurance each time an employee is paid. The system is being brought in to make it easier to implement Universal Credits, which will replace the current benefit system from October 2013. RTI will become compulsory for small employers in April 2013.
At present your payroll is operated with PAYE payments being made on a monthly or quarterly basis to HMRC. At the end of the tax year, a form P35, End of Year Return, is submitted electronically which contains information concerning all your employees during the tax year. This is the only time that HMRC obtain the information regarding an employee’s pay. With RTI, Taxing Nannies will be required to submit information to HMRC each time your nanny is paid ie weekly, fortnightly, 4 weekly or monthly, depending on the arrangements you have with your employee(s).
Rest assured that Taxing Nannies will have procedures in place to implement RTI. However, it will be vital for you to supply the information regarding any changes to your nanny’s salary or other payroll details on time and information concerning the nanny’s basic details such as address, national insurance number and date of birth will be essential to enable us to process the payroll. We will write to you in plenty of time regarding any change in our procedures or if we require further information from you.
Once RTI has been implemented, HMRC will be able to identify late payments of PAYE and National Insurance much more easily and clients who pay late are likely to receive specific demands for underpaid tax.
HMRC have already indicated that they will be clamping down on tax avoidance and RTI will give them more information to be able to identify gaps where there are no PAYE deductions for a nanny. An employer who fails to register will therefore run the risk of being investigated and of having to pay interest and penalties on unpaid PAYE and National Insurance together with an additional penalty of 100% of the outstanding tax.
At present, an employer needs to register with HMRC if their employee earns over the lower earnings level for national insurance of £107 per week. The implementation of RTI combined with Universal Credits will mean that all employees will require to be registered with HMRC, regardless of the level of income.
PLEASE PASS THIS INFORMATION ON TO ANY FRIENDS OR COLLEAGUES
AND WE WILL BE HAPPY TO BE OF ASSISTANCE TO THEM.