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Olivia Hill

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How PAYE changes (RTI) will affect HR professionals


Real Time Information (RTI) is coming into play from next month and will change the way employers report PAYE information. Naturally, this will have large implications on the day-to-day role of HR professionals in both small and large organisations.

Olivia Hill, Head of HR at AAT (Association of Accounting Technicians) discusses how to prepare for RTI.

RTI is being introduced to improve the PAYE system by assisting HMRC in gathering critical data on a more frequent basis, and reconciling the income tax and national insurance deductions with payments.

Most employers and pension providers will be legally required to report payroll information using RTI from April and nearly all employers should be able to file using RTI by the end of September.

The long term benefits of RTI will be felt by all employers and HR professionals in particular. For instance, tax records for all employees will be much more accurate (particularly beneficial when staff leave or enter an organisation) and those employees eligible for universal credits will get the right monthly benefits.

With this in mind, it’s important to note the implications (good and bad) RTI will have on the HR sector.

1. Coping with the changes. HR professionals need to know if their software can cope and record payroll in real time. Updates in software may be required bringing with it an associated cost.

2. Getting it right. Penalties for errors made in employee data will be enforced by HMRC. HR professionals should be accountable for the accuracy of this information so the business isn’t hit by these fines.

3. Missing out. RTI will be implemented in stages from April – October 2013 so it’s essential that HR professionals find out when they are due to start reporting in real time. Changes will need to be communicated to employees as soon as possible in order to reduce the administrative and costly burden this no doubt will have.

While some organisations have invested time and resource to prepare for a smooth changeover others have not. Research by AAT clearly indicates that smaller enterprises, sole traders and micro businesses that don’t have a finance division or a HR function remain completely oblivious and have little or no understanding about the impact it will have.

Luckily, there are some basic tips that all organisations can keep in mind to make the transition as smooth as possible.

Get ahead with RTI

1) Don’t bury your head in the sand – get informed
Get in touch with your software payroll provider now. You’ll want to know if your payroll software will be updated so that you can file your payroll data in real time. Be an avid visitor to the HMRC website. Even better, if you have a Twitter account, follow HMRC (HMRCgovuk) so that you’re up to date with a whole host of information relevant to changes in legislation.

2) Communicate internally and cleanse
Businesses of all sizes, and that includes owner-managed companies and sole traders, need to start cleansing their data now. HR professionals will need to communicate the reasons for data checks with their employees and get employees to provide and update information where necessary e.g. national insurance, home address, date of birth etc. If data is incorrect this will naturally cause problems such as incorrect tax and could lead to compliance checks from HMRC.

3) Think cost and time
While most businesses will have internet access, all businesses need to know if this access is good enough to provide information in real time. Also, is your computer hardware and payroll software able to process information in real time? You may face a one-off cost to upgrade payroll software and you may need to train an employee on new internal systems. Start making changes now.

4) Why bother?
You can’t hide from this. HMRC is in the process of deciding on the scale of penalties to put in place for those organisations that don’t comply. HMRC is considering a number of different penalty regimes. However, one thing is certain and that is HMRC will select a penalty regime which businesses cannot ignore.

5) Get professional help
If you haven’t got an accountant or tax advisor in-house, you may want to consider this as a service. A professional accountant, tax advisor or payroll bureau will be able to advise you on what you need to do to implement RTI. While professional help is another cost to consider, it may potentially save you in the future. Jump online to "Find an accountant."

2 Responses

  1. Getting RTI-ready

    HR professionals who don’t deal directly with payroll and use external payroll providers still have responsibilities within this process.
    Data quality is critical for RTI to run smoothly and it is the role of employees and the HR department to ensure employee data (e.g. national insurance number, date of birth, full name etc.) is accurate and up to date. There will also be expectations to report new forms of information including details of temporary and casual staff, hours worked, changes to employee working patterns, new starters, leavers and so on. HR professionals are accountable for reporting this information to their providers in real time (as opposed to once a year) which will naturally put a strain on time and resource.
    Finally, and although it may sound obvious, HR professionals need to ensure that their payroll provider is RTI-ready with the right software.  

  2. RTI

    Ok but what does it mean for HR professionals who do not double up as payroll?


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