25 Mar Do you understand RTI reporting for payroll purposes?
Running a payroll for any size of business can be a complex matter and government requirements for Real Time Information (RTI) can make this more difficult. Use of RTI means employers – including start-ups – need to report all gross pay, National Insurance (NI), tax and other deductions before, or at the time, payments are made. Prior to this employers could wait until the end of tax years to report.
About PAYE RTI reporting
The RTI legislation came into effect in 2013 and HMRC can issue financial penalties for businesses that don’t comply.
Reporting is known as Full Payment Submission (FPS) and needs to be a digital submission from your payroll software. You will need to report on all employees earnings, even for workers earning less than £116 per week. There are a few exceptions to the requirement to submit your FPS by due pay dates, but companies and start ups that only make quarterly HMRC submissions are not included as exceptions.
What does this mean for my startup?
If you’re planning a UK startup, the requirement for real-time payroll and deductions reporting does mean that you will need to invest in appropriate software if you take on any employees. The government’s Making Tax Digital (MTD) initiative is another prime consideration, and RTI reporting is just one more aspect that will feed into this.
There are lots more payroll, NI and pensions associated issues that startups and employers in the UK need to be aware of and MTD is already in place for UK businesses making regular VAT returns. It’s really no longer possible for any kind of business to rely on manual accounting and record keeping, whether this is for payroll functions or any other kind of accounts activities.
Should I outsource payroll?
One alternative to running your own payroll is to outsource employee pay to a reputable provider. And, if you want to discuss this in detail the experts at SQK Accountancy will be more than happy to talk you through all issues so you can make an informed decision. We’re very much cloud-based accountants, so we can handle payroll and any associated accountancy issues for businesses in any location.