What is RTI Reporting?

Real Time Information (RTI) is the system through which UK employers report payroll information to HMRC electronically each time they pay their employees. Before RTI was introduced in 2013, employers only reported payroll data annually. Now, every payment to every employee must be reported on or before the payday itself.

Why RTI Exists

RTI was introduced to give HMRC an up-to-date picture of earnings and deductions across the workforce. This enables:

• Accurate tax code adjustments without waiting for end-of-year reconciliation
• Faster detection of overpayments and underpayments of tax
• Real-time data for Universal Credit and other benefit calculations
• Reduced paperwork by replacing the annual P14 and P35 returns

The system means that HMRC knows what each employee has been paid almost immediately, rather than waiting until the end of the tax year.

Who Must Report Under RTI

All employers operating PAYE payroll must submit RTI returns if they have any employees being paid. This includes:

• Companies of all sizes, from a single employee to thousands
• Sole traders with employees
• Partnerships employing staff
• Charities and not-for-profit organisations
• Agencies paying temporary workers

There are no exemptions based on employer size. Even employers using HMRC’s free Basic PAYE Tools must submit RTI returns.

RTI Submission Types

There are two main types of RTI submission:

Full Payment Submission (FPS)

The FPS is the primary RTI return. It must be sent to HMRC on or before each payday and contains detailed information about every employee being paid in that run.

An FPS includes:

The FPS also carries starter and leaver information. When a new employee joins, their details are included in the first FPS. When an employee leaves, their leaving date and reason are reported on the FPS, which generates the P45 data.

Employer Payment Summary (EPS)

The EPS is used to report adjustments that reduce the amount the employer owes to HMRC. It does not contain individual employee data but covers:

• Statutory pay reclaims — recovering amounts paid for Statutory Sick Pay , Statutory Maternity Pay and other statutory payments
• Employment Allowance claims — the annual £5,000 reduction in employer NIC liability
• CIS (Construction Industry Scheme) deductions suffered
• Apprenticeship Levy adjustments
• No payment indicator — when no employees were paid in a tax month

An EPS must be submitted by the 19th of the month following the end of the tax month it relates to.

RTI Deadlines

Late FPS Submissions

HMRC recognises that occasional late submissions happen. A single late FPS in a tax year will not normally trigger a penalty. However, repeated late submissions attract automatic monthly penalties:

Penalties begin from the second month of late filing in a tax year.

What Happens with RTI Data

Once HMRC receives an FPS, the data feeds into several systems:

• Tax code updates — HMRC may adjust tax codes based on reported earnings, underpayments or new circumstances
• Universal Credit — the Department for Work and Pensions uses RTI data to calculate benefit entitlements
• State Pension records — NIC data contributes to qualifying years
• Student loan collection — the Student Loans Company uses RTI data to track repayments
• Tax credit renewals — reported income informs annual renewals

How to Submit RTI Returns

Payroll Software

All RTI submissions must be made electronically using payroll software that connects to HMRC’s systems via the Government Gateway. The software handles:

• Generating the XML data in the correct HMRC format
• Transmitting the FPS and EPS securely
• Receiving acknowledgements and error messages from HMRC
• Storing submission records for audit purposes

HMRC Basic PAYE Tools

For employers with fewer than 10 employees, HMRC provides free software called Basic PAYE Tools (BPT). It handles FPS and EPS submissions, calculates tax and NICs, and produces payslips . Larger employers need commercial software or a payroll bureau.

RTI and Year-End Procedures

At the end of the tax year (5 April), the RTI process replaces the old annual return:

1. Final FPS — the last FPS of the year must have the “final submission” indicator set, confirming that no more payments will be made in that tax year
2. P60 generation — payroll software produces P60 certificates for every employee on the payroll at 5 April, which must be provided by 31 May
3. Final EPS — if claiming Employment Allowance, statutory pay recovery or reporting no payments for the final period, a final EPS must be sent by 19 April
4. P11D submission — benefits in kind must be reported separately by 6 July

RTI Error Corrections

If an error is found in a submitted FPS, the correction method depends on the timing:

Same Tax Year

Submit a corrected FPS with the updated figures. The year-to-date totals will automatically replace the previous values. There is no need to submit a separate correction return.

Previous Tax Year

Submit an Earlier Year Update (EYU) for tax years up to 2019/20. For 2020/21 onwards, corrections to previous years are made through a revised FPS for the relevant period.

Common Errors Requiring Correction

RTI and Accounting Records

RTI submissions form part of the employer’s accounting records . Employers should retain:

• Copies of all FPS and EPS submissions
• HMRC acknowledgement receipts
• Supporting payroll calculations
• Records of any corrections made

These records must be kept for at least three years after the end of the tax year they relate to, though six years is recommended for general accounting purposes.

RTI Reporting for Different Pay Frequencies

Employers with multiple pay frequencies must submit separate FPS runs for each group of employees on their respective paydays.

Alignment with PAYE Payments

RTI reporting and PAYE payment to HMRC are separate obligations but closely linked. The FPS tells HMRC how much is owed, while the actual payment must reach HMRC by the monthly deadline. Employers should reconcile their RTI submissions against payments to ensure:

• The total tax and NICs reported on FPS submissions matches the payment made
• Any EPS reductions are properly reflected
• The running PAYE account balance with HMRC is accurate

Discrepancies between reported and paid amounts will trigger queries from HMRC and may indicate errors in the payroll calculations or RTI submissions.