We've been liaising with HMRC and CIPP since the consultation stages of RTI, as we wanted to be RTI compliant before the enforcement date. We have implemented robust controls and warnings to ensure compliant data for certain fields such as ‘name' because nicknames or preferred forenames are not accepted.For more background info, see Quirky HMRC Facts and How HMRC Match Data.
Pay As You Earn was nationally introduced in 1944 to replace the existing annual or twice-yearly collections of tax. Back then, employees tended to stay in the same job from leaving school to the end of their working career. This is no longer the case and HMRC are not always informed of employees' earnings within a tax year - which can result in over or under payments of tax that are not highlighted until the tax year end. The purpose of RTI is to ensure that more employees will pay the right amount of Income Tax and National Insurance in the tax year.
After the introduction of Agency Worker Regulations in October 2011, we have been busy preparing for Real Time Information (RTI), with direct support from HMRC (as part of their pilot scheme) to make sure that we're submitting the correct data in the correct format.Here's some information about what RTI is and what it means.
For our My Max and limited company contractors, they will see no obvious difference as we'll do all the work for them. The only difference is that as HMRC will have their full year employment history, they should never pay too much tax again.
Your payroll teams and providers should all be aware of RTI as it affects every company regardless of size which has employees, including yours. For your PayStream contractors you will see no changes to the existing processes we have in place as we're already RTI ready.
One of the biggest challenges for us was the data cleanse project which ensured that all of our contractors, paid in 12/13 tax year, had correct personal details in the required HMRC format. Our payroll and reporting systems had to be tailored to capture the additional fields required for RTI that were not previously declared under the year-end processes. Our reporting and submissions had to support the complications that surround contractors' irregular payments such as multiple payments made in the same pay period and bulk payments covering multi-pay periods, all of which have to be declared in the RTI submission. Our main implementation costs came from having to upgrade our Bacstel-IP software to support the BACS cross references (Hash) which allows HMRC to corroborate the data returned against the payment made to the individual in preparation for Universal Credits due in October 2013.
If you're interested in finding out more about RTI, further information is available on the HMRC website.
RTI is information about Income Tax, National Insurance contributions (NICs) and other deductions which employers will have to provide to HMRC in real time when payments are made, instead of waiting until after the end of the tax year.
With My PSC, your contractors can set up and run their own limited company in the most tax-efficient way possible, with minimum fuss.
Not only that but if they sign up now they'll get three months completely free. Find out more.
If you or your contractors would like to talk about My PSC in more detail and find out their IR35 status, please call us on 0800 197 6516,
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With My Max, your contractors can balance the benefits of continuous employment with the advantages of being a contractor. Find out more.
If you or your contractors would like to talk about My Max in more detail, please call us on 0800 197 6516, or fill in the form below and we'll be in touch whenever suits you.