Gone are the days of scrambling at year-end with boxes of payslips and calculator marathons. Real-Time Information (RTI) changed everything back in 2013, and if you’re still treating it like an optional extra, you’re missing the point entirely.
RTI isn’t just another form to fill out. It’s how HMRC knows what’s happening with your payroll right now, not months later when everyone’s forgotten what went wrong.
What RTI actually means for your business
Real-Time Information does exactly what it says on the tin. Every time you pay someone, you tell HMRC about it. Not at the end of the year when everyone’s moved house and changed jobs – right now, when the information is fresh and accurate.
This real-time approach means HMRC can update tax codes immediately instead of waiting until April to sort out the mess. For your employees, this translates to fewer nasty surprises when their tax bill arrives.
The system works through two main submission types, and understanding these is crucial for staying compliant and avoiding penalties.
The two submissions you absolutely must understand
Full Payment Submission (FPS) – Your bread and butter
The FPS is your main event. Every single time you pay someone – and we mean every single time – you need to submit an FPS on or before payday.
When to submit:
- Weekly, fortnightly, monthly – whatever your pay cycle
- Even for payments under £96 per week
- For every employee, including directors and short-term workers
- Before payday, not after (this matters more than you think)
What goes in:
- Employee details (name, address, National Insurance number)
- Tax codes and calculations
- Gross and net pay amounts
- Tax and National Insurance deductions
- Pension contributions
- Student loan deductions
- Employment status (starter, leaver, or continuing)
The FPS replaced those old P46 and P45 forms for starters and leavers. Now it’s all handled in one submission, which is actually much simpler once you get the hang of it.
Employer Payment Summary (EPS) – The clean-up crew
The EPS handles everything the FPS can’t. Think of it as your adjustment tool for claiming money back and reporting periods when nothing
happened.
When you need an EPS:
- By the 19th of the month following the tax month
- When claiming statutory payment recoveries (maternity pay, sick pay, etc.)
- For months when you paid nobody
- To claim Employment Allowance
- For Construction Industry Scheme deductions
What it covers:
- Statutory payment recoveries
- Employment Allowance claims (up to £10,500 per year)
- Periods of inactivity
- CIS deduction claims
- Final year-end submissions
The timing that trips everyone up
Here’s where businesses get caught out. RTI submissions must happen on or before payday. Not when you remember. Not when it’s convenient. Before you pay people.
This seems obvious, but payroll teams still submit late and wonder why HMRC sends penalty notices. The system is called Real-Time Information for a reason.
You can submit early – say, if your payroll team is going on holiday – but you can’t submit if the information might change significantly before payday.
Common RTI mistakes that cost money
Missing “no payment” periods
If you don’t pay anyone in a tax month, you still need to tell HMRC. Submit an EPS declaring a period of inactivity. Skip this, and HMRC will assume you forgot your FPS and start issuing penalties.
Late FPS submissions
Submit after payday and you’re looking at £100 per month penalties, rising to £400 for continued non-compliance. For something as simple as hitting submit on time, these penalties are completely avoidable.
Incorrect employee information
Wrong National Insurance numbers or tax codes cause calculation errors that create problems for employees and extra work for you. Check your data before submitting.
Forgetting starter and leaver information
New starters need their checklist information included. Leavers need to be marked correctly with their final pay details. Miss these and employee tax records get messy.
When RTI gets complex
Directors are different
Directors have special National Insurance rules based on annual earnings rather than pay period earnings. This often requires year-end adjustments that need careful handling.
Multiple jobs with the same employer
If someone has two roles with your company, different rules apply. Make sure your payroll system handles this correctly.
Death of an employee
Include the date of death as the final employment date in your FPS. There’s no special indicator field, but the date tells HMRC everything they need to know.
Mid-year corrections
For current year errors, submit a corrected FPS. For previous year mistakes, you need to amend and resubmit the affected month’s submission. EPS errors can’t be resubmitted – correct them in the next period.
The technology that makes RTI work
Most businesses use payroll software that handles RTI automatically. The software calculates everything, formats the submissions correctly, and sends them to HMRC through secure connections.
Your options:
- Commercial payroll software (most common)
- HMRC Basic PAYE Tools (free for smaller employers)
- Third-party providers (accountants or payroll bureaus)
- Electronic Data Interchange for large complex systems
Whatever system you use, make sure it’s HMRC-recognised and stays current with regulatory changes.
Best practices that prevent problems
Keep accurate records
Maintain up-to-date employee information, including addresses, National Insurance numbers, and tax codes. Incorrect data creates problems
that take time to fix.
Monitor submission confirmations
Check that HMRC receives and accepts your submissions. Most systems provide confirmation receipts – keep these as evidence.
Reconcile regularly
Check your HMRC online account balance against your records monthly. Discrepancies are easier to fix when caught early.
Plan for busy periods
Year-end brings additional reporting requirements. P60s must be issued by May 31st, and final submissions need careful attention to detail.
Document your processes
Write down how your RTI process works. When team members change or systems get updated, having documented procedures prevents mistakes.
What happens when it goes wrong
RTI penalties start at £100 per month for late submissions and can escalate quickly. More importantly, incorrect submissions create problems for your employees’ tax records that take months to resolve.
HMRC expects RTI submissions to be accurate and on time. They provide extensive guidance, free software for smaller employers, and helpline support. With these resources available, there’s little excuse for ongoing compliance failures.
Getting RTI right from day one
The key to successful RTI is treating it as part of your regular payroll process, not an add-on task. When RTI becomes automatic – check data, process payroll, submit FPS, handle any EPS requirements – compliance becomes much easier.
If you’re struggling with RTI compliance, the problem usually isn’t the system itself. It’s often about processes, training, or using software that doesn’t fit your business needs.
Why RTI matters for your business
Beyond avoiding penalties, RTI benefits everyone involved. Employees get more accurate tax codes throughout the year. HMRC gets timely information for benefit calculations. Employers get better record-keeping and fewer year-end surprises.
The system works when businesses embrace it properly. Problems arise when RTI is treated as a burden rather than an improvement on the old annual reporting system.
Modern payroll technology makes RTI straightforward for businesses of all sizes. The challenge isn’t technical – it’s building reliable processes and keeping them running consistently.
Need help getting your RTI process right? The team at Ascend Payroll handles RTI submissions for businesses across the UK. Our systems ensure accurate, timely submissions while you focus on running your business. Get in touch to see how we can simplify your payroll compliance.
