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Much was made of the Government's shake up of the welfare system when they announced the introduction of Universal Credit.
This new benefit grouped a series of payments, such as jobseekers allowance and income support, under one umbrella. But with it came a shake up for the nation's PAYE systems.
As a result, RTI (Real Time Information) PAYE returns were required meaning more responsibility for employers.
Here, we explore the reasons behind RTI, what it means for bosses and the penalties they can face if they don't adhere to the rules.
Universal Credit – the Government's new catch-all for six benefit payments – was the catalyst for RTI. Spearheaded by the then Work and Pensions Secretary Iain Duncan-Smith, the introduction of Universal Credit marked the biggest overhaul to the UK's welfare system since the 1940s.
The idea behind the new credit was to 'make work pay' – so people didn't see their income drop if they came off benefits and into low-paid work – and to simplify the system, making it easier for those who had to claim while reducing the potential for fraud.
As Universal Credit, introduced on a rolling basis throughout 2016, combined previous benefits related to income, the Government needed people's payment details in real time to allow them to adjust welfare payments. RTI was introduced to cover this requirement, spelling an equally big shake-up in the world of PAYE.
The changes mean employers have to provide PAYE tax reporting more frequently. Rather than waiting until the end of the tax year to file their reports, firms now have to submit an RTI report every time employees are paid.
These more regular returns are required by law as part of payroll arrangements – and attract hefty fines if they are not filed on time.
It's important that firms ensure their RTI returns are kept up to date as failure to do so can attract penalties. Fines for late reporting of payroll information depend on the number of employees you have; businesses with 1 – 9 staff would be hit with a £100 charge, while those with 250 or more would have to cough up £400.
HMRC says it does want to issue penalties so will send electronic alerts to remind employers if a payment submission is late, it hasn't received the right amount for your workforce or the full payment is due.
These reminders are sent if it's your first failure to send a tax report on time within the financial year – after that the Government then starts to issue penalties.
Ensuring you're on time, every time
As experts in all areas of payroll, the AMR team is on hand to make sure you submit your RTI returns on time, every time. The new rules mean extra work for companies and this is where we can step in and relieve you of the burden of having to hit more frequent deadlines.
There is no limit to the number of employees we can look after and, as well as RTIs, our team can help with other payroll requirements, including P60s and BACS payments.
Get in touch on 01892 559480 or complete our contact form to find out how we can help with your payroll and RTI needs.