What is RTI?
Real Time Information (RTI) is HMRC’s digital payroll reporting system that requires employers to submit PAYE payroll information every time employees are paid. Instead of reporting once a year, businesses send payroll data to HMRC in real time through RTI payroll submissions, helping ensure tax, National Insurance and other deductions are recorded accurately and on time.
How does RTI work?
RTI keeps HMRC updated every time you run payroll. The process is simple:
- Run payroll and calculate wages, PAYE tax, and National Insurance contributions.
- HMRC updates its records using the information provided.
What information is included in an RTI submission?
An RTI submission typically includes:
- Employee names, addresses and National Insurance numbers
- National Insurance contributions
- Student or postgraduate loan repayments
- Statutory payments, such as maternity or sick pay
- Pension contributions and workplace pension details
Why RTI matters for businesses
RTI helps employers keep payroll records accurate and ensures HMRC receives the right information at the right time.
Benefits of RTI include:
- Fewer payroll reporting errors
- Reduced risk of HMRC penalties
- More accurate PAYE and National Insurance records
- Less end-of-year administration
- Better visibility of payroll obligations throughout the year
What happens if RTI is submitted late?
RTI submissions should be sent to HMRC on or before payday. If a Full Payment Submission (FPS) is submitted late, HMRC may issue a penalty, particularly if late reporting becomes a recurring problem.
Employers can also face penalties if they fail to submit an Employer Payment Summary (EPS) when one is required.
In some cases, HMRC allows a short three-day grace period for occasional late submissions. However, repeated delays can still trigger penalties, which range from £100 to £400 per month, depending on the size of the PAYE scheme.
Real Time Information (RTI) example
Sarah owns a café in Manchester and pays six employees on the last Friday of each month. On 28 June, she runs payroll and pays a barista £1,850 before deductions.
Her payroll software calculates the employee's PAYE tax and National Insurance contributions, then automatically sends a Full Payment Submission (FPS) to HMRC before the wages are paid. The submission includes details such as the employee's pay, tax deductions, and National Insurance contributions.
Because the FPS is submitted on time, HMRC's records are updated straight away and Sarah remains compliant with PAYE reporting requirements.
RTI vs the old PAYE reporting system
Before RTI was introduced, employers typically reported payroll information to HMRC at the end of the tax year. Today, payroll data is submitted each time employees are paid, giving HMRC a much more up-to-date picture of earnings and deductions.
| Feature |
RTI (Current System) |
Old PAYE Reporting System |
| Reporting frequency |
Payroll information is reported every payday. |
Payroll information was mainly reported at the end of the tax year. |
| HMRC records |
HMRC records are updated in real time. |
HMRC records could be months out of date. |
| Accuracy |
Helps reduce payroll errors and improve accuracy. |
Errors were often discovered much later. |
| Employer visibility |
Gives employers ongoing visibility of PAYE obligations. |
Relied heavily on year-end reporting processes. |
Common RTI mistakes employers make
RTI reporting is quite straightforward, but a few simple mistakes can create unnecessary headaches for employers. Common issues include:
- Sending an FPS after employees have been paid
- Entering incorrect employee details or National Insurance numbers
- Reporting the wrong pay, tax, or National Insurance figures
- Forgetting to submit an EPS when one is needed
The good news? Most RTI errors are easy to avoid. Keep your payroll records up to date and check submissions before they're sent. It’ll help you save time, stress, and potential HMRC penalties.
