PAYE reporting – year two of Real Time Information
If you have more than nine employees but fewer than 50 you should have started real time PAYE reporting from 6 April.
The HM Revenue & Customs (HMRC) relaxation for employers of this size has now ended. New employers with nine or fewer employees must also start real time reporting.
Under real time information reporting – which HMRC calls RTI – employers have to send details to HMRC every time they pay an employee at the time they pay them. They must also use payroll software to send this information to HMRC electronically as part of their routine payroll process.
Existing employers with nine or fewer employees will now not have to start real time reporting until April 2016. They can continue to submit information to HMRC just once by the end of each tax month, even if employees are paid weekly or more frequently. New businesses cannot make use of this relaxation.
For other employers, 2013/14 was the first year of real time PAYE reporting.
Getting to understand penalties can be quite daunting, but it is a good idea to know how much leeway you have before they apply.
Late payment: You are allowed to be late with one monthly or quarterly payment without incurring a penalty. Company owner-managers may have just one year-end payment. But a second late payment will mean a penalty of 1% of the tax due, with the percentage increasing for each subsequent late payment during 2014/15. Harsher penalties will apply if you are more than six months late. HMRC has gone ahead with the introduction of in-year interest, so any late payment will also attract daily interest.
Late filing: After 6 October, you will not be penalised for your first late submission. Penalties are then applied on a monthly basis, and any subsequent late submission during a month will mean a penalty. This is bad news for weekly filers, although there will be just one penalty even if several weekly submissions are late during any month. Penalties range from £100 to £400 depending on the number of employees, and there will a harsher penalty for employers who are three months late.
Inaccurate filing: Incorrect submissions could attract a penalty if you do not take reasonable care, so it is worth taking the extra time to ensure accuracy.