Have you got your head around Real Time Information (RTI) yet? Many small businesses are saying that they were not able to ready themselves for the deadline for this new tax regime.
Submitting Payroll Data to the Revenue in Real Time
Under RTI, you have to make online submissions of information about employees and their pay to HMRC on or before the day they are actually paid. If you pay monthly, that means once a month, but for anyone paid weekly, the RTI return must be submitted every week. This is instead of sending in the quarterly and annual employer returns and is a major change in the work relating to payroll operation.
For many companies, the changeover date was 6 April 2013, but small businesses were given a less stringent regime with more time to prepare for it. They could submit their returns monthly even if they paid some employees weekly. Of course, they still would have to find the wherewithal to update their systems or invest in new payroll software, as well as to set up new procedures and resource them.
Employee details are critical. It is particularly important that national insurance numbers and dates of birth are accurate, and home addresses must be kept up to date. It’s a tall order for a small operation, but of course, your outsourced bookkeepers will be up to the job.
Period of Grace for Small Businesses Extended
Since many of the smallest businesses have reported their concerns that they have still not managed to prepare themselves properly, HMRC have now extended the full deadline for those with fewer than 50 employees to March 2015. If you fall into this group, you can continue to submit your returns monthly until this date, so you still have a few months of grace.
With the help of your bookkeepers, even if you aren’t ready yet, you could most likely manage it before then. The sooner you can submit returns on or before wages and salary payment dates, the sooner you can breathe your sigh of relief knowing that you won’t be penalised from March next year.
Remember though, that if your business is doing well enough for your employee numbers to be growing and likely to hit the magic 50, you have no choice but to comply with RTI. Otherwise automatic fines that cannot be avoided will be applied.