RTI is the new system in which payroll information will be reported to HMRC.
At present we prepare payrolls for each client once a month, we then submit returns to HMRC each quarter and at the same time advise each client if they need to pay any amount of PAYE and National Insurance to HMRC.
This system creates a delay in information for HMRC, your salary for instance could double or treble and HMRC would not know until the end of the quarter, up-to three months later.
If you are receiving benefits or you have to make maintenance payments based on your salary HMRC would then have to back date changes which would get confusing and often mistakes would be made.
The new RTI system has been designed to eliminate this information delay.
Each month when we process a client's payroll, an online submission will be made to HMRC with the details of the amounts paid. This will allow HMRC to react quicker to changes and is the number one tool in delivering the governments new universal credit - their flagship welfare reform.
So that is the theory - what does it mean in practice?
New HMRC systems have never run smoothly at the beginning, they have always had issues and we believe RTI will be no different.
We understand the reporting requirements and we have technology in place to meet these demands but like all accountants we know HMRC will make it a bumpy ride.
If you have any questions about RTI then please do get in touch with us.