RTI represents a new approach to reporting under the PAYE system. Through RTI, employers will tell HMRC about tax, national insurance contributions and other deductions when or before payroll payments are made, rather than at year end. HMRC will thus receive more up-to-date information, and be able in theory to ensure that employees pay the right amount of tax and NICs in the tax year.
This month HMRC began its Real Time Information ‘pilot’ involving 310 volunteer employers. All other employers and their accountant advisers need to prepare now for the implementation of RTI when their time comes. HMRC requires all employers to be in RTI no later than October 2013, but plans to mandate smaller employers into RTI in April 2013 to coincide with the start of the tax year.