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Annual Payroll and RTI (real time information)

Under real time information (RTI) PAYE reporting, a Full Payment Submission (FPS) report is required to be made to HMRC every time an employee is paid, not just once after the end of the tax year as is currently the case.

RTI will be compulsory for most employers from the first pay date following 6 April 2013.

Effectively this means that either before, or at the time a payment of wages or salary is made, all the information about the employee and the payment, deductions, etc. must be made automatically to HMRC online. Most employers will begin to operate their payroll in real time in April, with all employers doing so by October. HMRC will tell each employer the date for sending PAYE information in real time – it cannot be sent until this date; if it is, it will be rejected. It must be stressed that the payroll information must be reported on or before any day when a payment is made, so it is important to set clear time schedules for payroll calculation. All employers must be registered with HMRC online and payrolls may be completed using:

• In-house or bought-in software suitably modified to provide real time submissions to HMRC
• Payroll service providers using appropriate software
• HMRC Basic PAYE Tools, but only for a maximum of nine employees at any one time. (This will apply to most churches in Scotland).

The maximum at any one time, includes everyone employed, no matter how short a time they work or how little they are paid. For most churches, the solution is to use a local payroll service provider or the HMRC BASIC PAYE Tools. The latter will calculate PAYE, NIC and student loan deductions, complete and produce the usual payroll records, and make the necessary in-year and end-year returns to HMRC. The information to be reported must also include approximate hours worked by each employee in a week. However it has limitations; it will not record any other deductions unrelated
to PAYE or produce payslips. It also may not handle certain scenarios, including:

• some changes in NICs category letters during the tax year
• changing leaving dates or restarting an employment
• changing pay interval during the tax year, e.g. weekly to monthly
• dealing with more than one payment to an employee in the same tax period
• operating net pay arrangements.

If any of these scenarios arise it will be necessary to start using commercial payroll software or change to using a
payroll service provider.

NOTE: It will be important to have contingency plans ready in case of computer and/or other failures or problems, such as a loss of internet connection. There is no facility to make payroll reports via email, or by filling in a form on a web page at this stage.

Peter (with help from HMRC website & ACAT)