Payroll Software and RTI-

Real Time Information(RTI)

The online process required by HMRC for the electronic transmission of employee details and payment information at the time payroll is run.

Payroll Software Requirements

Employers must use computerised software that is capable of electronic data transmission to HMRC and has been recognised and tested by HMRC.

Free Payroll Software

HMRC-recognised software that is generally ideal for smaller businesses with fewer than ten employees.

Payroll Bureau

A specialist business or accounting firm that carries out the payroll function and liaises with HMRC on behalf of a client.

Full Payment Submission (FPS)

A payroll submission used to inform HMRC about employee payments and deductions, sent on or before every payday.

Employer Payment Summary (EPS)

A submission made by the 19th of the following month to claim back amounts such as statutory maternity or paternity pay from HMRC.

FPS Submission Deadline

The report must be sent to HMRC using compliant software on or before the day the employees are paid.

Electronic Payment Deadline

The date by which any payroll amounts due must be paid to HMRC electronically, which is the 22nd of the following month.

Postal Payment Deadline

The date by which payroll amounts due must reach HMRC if paid by post, which is the 19th of the following month.

RTI Data Security

Employers must adhere to Data Protection legislation when storing and transmitting employee data via payroll software.

Calculating HMRC Payment

The total amount due to HMRC is calculated as the amount on the FPS submission minus any allowances claimed on the EPS.

Software Updates

It is the responsibility of the employer or bureau to ensure payroll software is updated to reflect annual changes in tax legislation.

Payroll Penalties

Fines incurred by an employer for submitting inaccurate information or failing to submit RTI reports to HMRC on time.

Payrolling Benefits

A method of reporting benefits in kind in real time via payroll software rather than at the end of the year on a P11D.

Mandatory Payrolling of Benefits

The requirement for employers to report benefits in real time through payroll software, which becomes compulsory from April 2027.

Record Retention for RTI

Employers must keep payroll records for three years after the end of the tax year to prove the accuracy of reports sent to HMRC.

Automatic Enrolment in Software

Payroll software helps manage the automatic deduction of workplace pension contributions for employees who meet defined criteria.

RTI Accuracy

HMRC conducts visits to check payroll software records, such as PAYE and returns, ensuring the business is reporting correctly.

Employer Registration

A business must register with HMRC as an employer before the first payday to enable software submissions via RTI.

Tax Year Alignment

Payroll software must be configured to the

UK tax year, which runs from 6 April to 5 April the following year.