Providing HMRC with accurate employee information helps ensure that employees pay the right amount of tax and National Insurance Contributions (NICs). It also helps protect their entitlement to certain state benefits. Accurate data will help employers save time as they’ll receive fewer enquiries from HMRC and their employees.
Very little new data is actually being introduced as a result of RTI. Most of the data formed is already a requirement for in year submissions and tax year end, but new data fields have been added.
New data fields:
Contracted hours – This is the number of contracted hours only. You will not need to update this each pay run based on actual hours worked.
Passport number – This will be required for new joiners, and is a sensible identity check for employers to confirm the joiner’s date of birth and that they are entitled to work in the UK. There is no requirement to collect passport numbers for existing employees.
Irregular Payment Indicator – As a general policy HMRC close employee records after week 13 of nonpayment on FPS and treat them as if they have left work. However, if a subsequent FPS with payment values is presented, then HMRC re- opens the record as if the employee never left. To stop HMRC getting in contact with individuals as if they had left employment, a new optional Irregular Payment Indicator is introduced to allow employers to show to HMRC when an employee is not going to be paid for a period of 13 weeks or more.
Before you can start making your regular submissions to HMRC, you will need to go through a process called Payroll Alignment. To all intents and purposes, this is just making sure that the records that you have and the records that HMRC have are in agreement. Where there are differences, HMRC will use the information that you have supplied. You or your client will have to send details of every employee from the start of the tax year.
The precise form that the alignment submission will take will depend on your circumstances; employers with more than 250 employees, or who operate a ‘split scheme’ (see glossary) will have to submit an Employer Alignment Statement (EAS), while smaller employers will send a first Full Payment Submission (FPS).
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