Real Time Information (RTI)

What Is Real Time Information (RTI)?

Real Time Information (RTI) is the UK’s system for reporting payroll data to HM Revenue and Customs (HMRC) each time employees are paid. Under RTI, employers must submit details such as earnings, income tax, and National Insurance contributions (NICs) in real time, rather than waiting until year-end. This ensures that HMRC holds up-to-date and accurate payroll data for each employee.

Why RTI Was Introduced

RTI was introduced by HMRC to modernize the PAYE (Pay As You Earn) system, improve the accuracy of tax collection, and align payroll reporting with real-time earnings. The initiative supports faster benefit adjustments, minimizes under- or overpayment of tax, and simplifies compliance management for both employers and employees.

How RTI Works

Employer Reporting Through Payroll Systems

Employers use RTI-enabled payroll software to automatically generate and send payroll data to HMRC whenever staff are paid.

Data Sent to HMRC in Real Time

Each submission includes detailed pay and deduction information—salaries, income tax, NICs, student loan repayments, and other adjustments—transmitted electronically to HMRC.

Submission Frequency (Per Pay Run vs Annual)

Unlike the previous annual submission model, RTI reporting occurs each pay run (weekly, fortnightly, or monthly), keeping records continuously current.

RTI Data Elements

Typical data elements include:

• Gross and net pay amounts
• Tax and NIC deductions
• Employer reference numbers
• Statutory payment details (e.g., SSP, SMP)
• Employee personal and payroll identifiers

Core Components

• Full Payment Submission (FPS): The FPS is the primary RTI report sent to HMRC on or before each payday. It details payments made and deductions applied for each employee.
• Employer Payment Summary (EPS): The EPS supplements the FPS by reporting statutory payments recovered, employment allowance claims, or adjustments when no employees were paid during a period.
• Earlier Year Update (EYU): Used to correct payroll data from a previous tax year, the EYU allows employers to amend prior submissions, ensuring HMRC records remain accurate.
• National Insurance Contributions (NICs) Reporting: NIC data submitted through RTI enables HMRC to accurately track employee contributions, ensuring entitlement to state benefits and pensions.

Benefits of RTI

• Improved Accuracy of PAYE Data: Real-time reporting minimizes discrepancies in tax and benefit calculations.
• Simplified Tax and Benefit Calculations: HMRC uses up-to-date payroll data to adjust tax codes and benefits efficiently.
• Faster Error Detection: Employers and HMRC can identify and correct issues before year-end.
• Reduced Year-End Administration: Annual returns such as P35 and P14 are no longer required under RTI.

Challenges & Common Issues

Despite its advantages, implementing RTI can present challenges such as:

• Technical Errors During Submission: Software or network issues causing failed or incomplete uploads.
• Late or Incorrect FPS Filings: Delays can trigger HMRC penalties.
• Data Quality and Validation Failures: Inaccurate employee data (e.g., NI numbers) can lead to rejected submissions.
• System Integration for Large Employers: Ensuring synchronization between HR, payroll, and finance systems can be complex.

RTI Compliance Requirements

• Employer Responsibilities Under PAYE: Employers must report every employee payment through an RTI-compliant payroll system, ensuring accuracy in tax and NIC data.
• Deadlines and Penalties for Late Reporting: FPS submissions must reach HMRC on or before the employee’s payday. Late or incorrect filings may result in financial penalties or compliance notices.
• Data Security and Confidential Transmission: RTI data must be securely encrypted during transmission to protect sensitive payroll information.
• HMRC Audits and Recordkeeping Obligations: Employers must maintain accurate payroll and tax records for a minimum of three years to comply with HMRC audit requirements.

RTI in Global Context

• RTI’s Role in Digital Payroll Modernization: RTI represents a major step toward digital payroll transformation, paving the way for more automated, transparent, and efficient tax systems.
• Comparison with Other Countries’ Payroll Reporting Models: Similar real-time tax reporting systems are emerging globally, such as Single Touch Payroll (STP) in Australia and real-time reporting initiatives in the EU.
• Future of Real-Time Tax Reporting: As governments continue digital integration, RTI models are expected to evolve into fully automated, cross-system data ecosystems, linking payroll, tax, and benefits in real time.

Mercans Insight

Mercans supports employers with RTI-compliant payroll systems, automating FPS and EPS submissions directly to HMRC. Through cloud-based payroll technology and real-time analytics, Mercans ensures accurate, secure, and compliant reporting for UK-based and multinational companies – simplifying PAYE administration and aligning payroll with HMRC’s digital future.