RTI Payroll Checklist: A Guide for Accountants

Real-Time Information (RTI) payroll reporting is essential for managing employee payments and tax obligations. For accountants, adhering to RTI requirements ensures compliance with HMRC regulations and helps avoid penalties. Accurate records and timely submissions are necessary to prevent financial discrepancies and administrative challenges.

Accountants must navigate various elements within the RTI framework, from gathering essential employee data to calculating taxes such as PAYE and USC. Each step requires precision to ensure smooth operations and compliance.

Understanding RTI Requirements

Navigating Real-Time Information (RTI) requirements is a key task for accountants managing payroll. RTI, introduced by HMRC, requires employers to submit payroll data each time employees are paid. This system improves tax record accuracy and streamlines collection. Accountants must grasp RTI nuances to ensure compliance and avoid penalties for late or incorrect submissions.

The RTI framework involves Full Payment Submissions (FPS) and, when necessary, Employer Payment Summaries (EPS). The FPS, sent to HMRC on or before paydays, details amounts paid and deductions such as income tax and National Insurance contributions. The EPS reports adjustments like statutory payments or recoveries. Understanding when each submission is necessary and ensuring data accuracy is critical.

Penalties for non-compliance can be significant, with fines starting at £400 per month for businesses with 50 or more employees. Maintaining a reliable system for tracking deadlines and ensuring accuracy helps accountants avoid such penalties.

Gathering Employee Information

Collecting employee information is foundational for RTI compliance. Accountants must meticulously gather and verify personal details, including full names, addresses, National Insurance numbers, and tax codes, as well as employment details like start dates and pay rates. This must comply with data protection regulations, ensuring confidentiality under GDPR.

Accurate, up-to-date employee data is essential for smooth payroll operations. Errors can lead to miscalculations in deductions and payments, creating disputes and administrative burdens. Verification processes, such as double-checking National Insurance numbers or confirming tax codes with HMRC, are necessary.

Technology simplifies this process. Payroll software minimizes errors by automating data collection, synchronizing with HMRC databases, and enabling seamless submissions. Regular audits of employee records can identify and correct discrepancies before they impact payroll calculations.

Calculating PAYE and USC

Accurate calculation of PAYE (Pay As You Earn) and USC (Universal Social Charge) is crucial. PAYE requires employers to deduct tax based on HMRC tax codes and rates. For the 2023/24 tax year, the standard personal allowance is £12,570, with earnings beyond this taxed at 20% up to £50,270, and higher rates for additional income.

USC, applicable in Ireland, is based on gross income before pension contributions or personal allowances. As of 2023, rates range from 0.5% on the first €12,012 to 8% on income over €70,044. Accountants must apply correct rates based on total earnings and exemptions.

Payroll software aids in applying tax rates and thresholds, reducing human error. These systems generate detailed payslips and reports, ensuring transparency and simplifying audits. Staying updated on legislative changes is essential, as tax rates and allowances can vary annually.

Ensuring Accurate Payment Dates

Timely payments are vital for employee satisfaction and regulatory compliance. Establishing and adhering to a consistent payroll schedule—whether weekly, bi-weekly, or monthly—is essential. Regularity ensures alignment with cash flow management and payroll obligations.

Financial planning tools integrated with payroll schedules can predict cash shortfalls, enabling businesses to secure funds in advance. Automated bank transfers ensure payments are made on time, reducing errors. Public holidays and weekends must be accounted for, with schedules adjusted to pay employees on the last working day before such periods.

Handling Amendments and Corrections

Managing amendments in payroll requires precision and adherence to HMRC regulations. Errors from data entry, incorrect tax codes, or changes in employee status must be addressed promptly to ensure compliance and accurate pay. Corrections typically involve submitting an updated Full Payment Submission (FPS) or, in some cases, an Employer Payment Summary (EPS).

Minor corrections can be resolved by submitting an additional FPS with the updated figures in the next payroll cycle. This approach maintains an accurate audit trail and ensures transparency. Complex corrections may require consultation with HMRC or professional advice. Documenting changes thoroughly with supporting evidence facilitates audits and internal reviews.

Proactively identifying and correcting errors reduces penalties and maintains trust with employees and regulators. Routine payroll audits and cross-checks help identify discrepancies early. Payroll software with built-in validation checks minimizes errors, while regular training for payroll staff on regulations and best practices enhances accuracy and reliability.