Whenever you pay your staff, you must tell HMRC about the payments. This reporting is known as real-time information – RTI for short.

If you pay your employees weekly, you must report weekly; if you pay them monthly, send the RTI monthly, and so on.

Double jeopardy

Your payroll must be:

1. correct, and
2. submitted on time. Send the RTI on or before the day that you pay your staff. Don’t forget or it’ll cost you.

Second time unlucky

HMRC will let you off once every 12 months – so no worries the first time your RTI is late, but if you make a habit of it the penalties will soon rack up.

How will I know?

HMRC will send out penalty notices only once a quarter, in July, October, January and April.

So if you get a penalty notice in July it will be for a late submission in April, May and/or June. Maybe all 3!

How much?

Unlike CIS penalties (a flat £100 per month), the RTI submission fines depend on your number of employees. For 2014/15 tax year they are:

The good news is that you can’t get more than 1 submission penalty per month. E.g. if you send a weekly RTI late for 4 weeks, you’ll only get fined once.

Those are the penalties for late submission – but remember that as well as being on time, the RTI must also be correct.

For errors, the taxman will base the penalty on the amount of potential lost revenue. If you took reasonable care, or were careless but reported the error without being prompted, you might not be penalised at all.

Avoiding RTI penalties

Whether you run your own payroll or outsource it to a specialist, as an employer the buck stops with you. So:

• Be accurate

Take time to check your figures before paying the wages.

If your payroll service submits the RTI on your behalf, let them know any changes asap; e.g. if anyone leaves or joins, or if you’re giving someone a pay rise.

• Be on time

If you pay your staff every Friday, that’s your RTI deadline. Diarise it, put a reminder in your phone, stick a Post-it on your fridge, whatever works for you.

If you use a payroll service, give them your info in plenty of time.

Submission penalties come into force from October 2014, so get into good habits now!

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TOP TIP: Run your payroll a week in hand. This means that next Friday you’ll pay staff for the hours they worked this week.

This gives you more time to process the payroll and to send the RTI.[/color-box]

HMRC – late and inaccurate payroll reporting