It is important to know that it is the employer’s responsibility to deduct the tax and national insurance from their employee’s pay and pay it to HMRC on their behalf. An employer is also responsible for paying any employer national insurance liability to HMRC.

Up until 6th April 2013, although HMRC expected these deductions and payments to be made, an employer would only have to report their figures to HMRC, yearly. This was always a bit messy. Employees could have been overpaying tax during that year so would require a refund at year end, equally they could have been underpaying tax and therefore the following tax year would have either had to be taxed harshly or had to pay HMRC back the tax they had underpaid. So HMRC brought in RTI, Real-Time Information submissions.

So, what is an RTI? An RTI is where employers send pay details on or before the time they pay their employees, electronically, as part of their pay run. Included in this submission is the employee’s pay, tax, and deductions. It also includes details of employer NI contributions and details of statutory payments, made to the employee.  

By providing HMRC with real-time information, if the employee is overpaying or underpaying tax, HMRC can issue a new tax code during the year to make these adjustments. Meaning by year end, the figures should be accurate, saving both the employee and HMRC having to repay any money. If an employee is due a tax refund during the year, this is paid to the employee by the employer and reclaimed against any PAYE or NI liability.

There are two types of submissions that the employer must send to HMRC – an FPS submission (full payment submission) and an EPS submission (Employer payment summary).

An FPS submission must be sent on or before the employee’s pay date and it records all the year-to-date figures of tax, national insurance and pay as well as the totals for that pay period. An EPS submission is what an employer sends to recover statutory payments such as sick pay, maternity pay and are also used if there is nil payment due for that month (such as if you are paid bi-monthly or quarterly). The FPS includes a lot of important information which can be found here.

If you report an incorrect figure to HMRC you can submit an APS (Additional payment submission) with a note to ‘correct an earlier submission.’

If you do your own payroll, you are responsible for sending HMRC all this information. If you are a member of our payroll service, we will submit all this information to HMRC on your behalf.