RTI Filing for Employers: Payroll Done Right

A payday is not just the day your staff, drivers or site team expect to be paid. It is also the deadline that matters for RTI filing for employers. Get the information to HMRC late, even by a day, and a straightforward payroll task can turn into a penalty, a correction, and unnecessary time spent on the phone.

For a small business, payroll should support the work, not become another job that follows you home. Whether you employ one administrator, a crew of subcontractors on PAYE, or a growing team around London and the South East, understanding the basics of Real Time Information helps you stay in control.

What RTI filing for employers means

RTI stands for Real Time Information. It is the system employers use to report payroll information to HMRC each time they pay employees. Instead of waiting until the end of the tax year to provide a full picture, HMRC receives pay, tax, National Insurance and other payroll details as they happen.

The main submission is the Full Payment Submission, usually called an FPS. This tells HMRC who has been paid, how much they received, what deductions have been made and the date they were paid. The key rule is simple: submit the FPS on or before the employees' payday.

That rule applies even if the money is paid early because of a bank holiday, Christmas shutdown or an agreed change to the pay date. The payment date reported should reflect the contractual or normal payday where the early-payment rules apply, so payroll needs planning rather than a last-minute rush.

For most employers, payroll software sends the FPS directly to HMRC. The software does not remove responsibility, though. You still need correct employee details, accurate hours and pay, and a sensible process for approving payroll before anything is submitted.

FPS and EPS: knowing which return to send

An FPS is required whenever you pay employees. It includes regular wages, overtime, bonuses, statutory payments and taxable benefits processed through payroll. It can also include starter information for a new employee when they do not have a P45.

An Employer Payment Summary, or EPS, is used for different circumstances. You may need one to tell HMRC that no employees have been paid in a tax month, to claim eligible statutory payment recovery, or to report reductions such as Employment Allowance. It can also be used to report certain adjustments that affect what you owe HMRC.

The practical point is that an EPS is not a replacement for an FPS. If staff have been paid, you submit an FPS. If there are no payments for a period, or you need to notify HMRC of a relevant adjustment, an EPS may be needed instead or as well.

This catches out seasonal businesses and construction firms in particular. A quiet month with no PAYE wages can be perfectly normal, but HMRC may expect a submission if your PAYE scheme remains active. Leaving the position unreported can lead to estimates and avoidable correspondence.

Your monthly PAYE payment is separate

Reporting pay to HMRC and paying HMRC are connected, but they are not the same task. After submitting payroll, you must pay the PAYE tax and National Insurance due.

Most small employers pay monthly, with payment reaching HMRC by the 22nd of the following tax month if paying electronically. Some very small employers may qualify to pay quarterly. The amount due can be checked in your HMRC online account, but it should also match your payroll reports. If it does not, deal with the difference quickly rather than assuming it will sort itself out.

The details that make or break a payroll submission

Most RTI problems begin before the submission button is pressed. The figures may be right, but a missing starter declaration, an incorrect National Insurance number or the wrong tax code can produce the wrong tax result for an employee.

When someone joins, collect their full name, address, date of birth, National Insurance number and P45 where available. If they do not have a P45, they need to complete the HMRC starter checklist so the correct statement can be applied. Guessing which tax code or statement to use is a poor shortcut and can leave an employee overtaxed or underpaying tax.

You also need a reliable handover between the person approving timesheets and the person running payroll. This is particularly relevant where hours change weekly, overtime is common or staff are paid different rates for different jobs. Late timesheets lead to rushed payroll, and rushed payroll is where mistakes tend to appear.

Before each pay run, check the following four points:

• employees joining or leaving, and any P45 or starter information received;

• hours, overtime, holiday pay, bonuses, sick pay and deductions;

• tax codes and HMRC notices received since the last run; and

• the intended payment date, especially around bank holidays.

A short check at this stage is much easier than correcting several pay periods later.

What happens if an RTI return is late or wrong?

HMRC may charge late filing penalties when an FPS is submitted after payday. Penalties generally depend on the number of employees and can apply each month a return is late. There are limited circumstances in which a late filing reason may be accepted, but relying on that is not a payroll process.

An incorrect FPS should normally be corrected through the next regular payroll submission, using the payroll software's correction process. The right method depends on the nature of the error and whether the tax year has ended. Do not simply submit the same figures again in the hope that HMRC will identify the intended version.

If you discover you have underpaid an employee, you will also need to consider the employment issue as well as the PAYE position. If you have overpaid them, recovering money must be handled carefully and in line with their contract and employment law. Payroll accuracy protects both the business and the people working for it.

Keep payroll records, including payslips, payments, deductions and employee details, for at least three years from the end of the tax year they relate to. Good records give you evidence if HMRC asks questions and make year-end tasks far less painful.

RTI is particularly relevant for owner-managed companies

Limited company directors often assume payroll is only worth dealing with when a salary is being paid regularly. In reality, director payroll needs the same care as any other employment arrangement. Salary levels may be part of a wider tax plan involving dividends, corporation tax and National Insurance, but RTI reporting still has to be done correctly and on time.

The right approach depends on the company's profits, the director's wider income, entitlement to National Insurance credits and whether other employees are on the payroll. A low salary is not automatically right for every director, and dividends are not a substitute for properly reporting wages.

For businesses using casual labour, make sure you have established whether each worker is genuinely an employee, a worker paid through PAYE, or a self-employed subcontractor. CIS does not remove the need for PAYE where employment status points to employment. This is an area where getting the setup right matters far more than trying to fix it after an HMRC review.

A workable routine for small employers

The easiest way to stay compliant is to set a payroll timetable that is earlier than payday. Give yourself time to collect hours, check changes, review the payslips and submit the FPS before wages leave the bank account.

For a stable monthly payroll, this may be a simple recurring routine. For taxi businesses, trades and firms with variable hours, weekly pay or changing staff, professional payroll support can remove a significant administrative burden. You still approve the pay, but someone experienced handles the calculations, submissions, payslips and HMRC deadlines.

Short And Sons Accountants can help employers put that routine in place, whether you need payroll taken off your hands or want support resolving an existing RTI issue. The aim is not paperwork for its own sake. It is accurate pay for your team, clear records for your business and fewer HMRC surprises.

A reliable payroll process gives you room to concentrate on the jobs, customers and contracts that keep the business moving. Set the deadline before payday, keep the information clean, and ask for help early when something does not look right.