What is Real Time Information (RTI)?

Real Time Information (RTI) is a payroll reporting system in the UK. Employers use the RTI system to report employee wages, tax deductions, and National Insurance contributions to HMRC.

How does RTI work?

Under RTI, employers must report payroll information every time they pay their employees, rather than submitting an annual return. This may require employers to make monthly or weekly returns. It must include all employees, even those not receiving pay in the given period.

The RTI system ensures HMRC has accurate and up-to-date tax records, reducing errors in tax codes and benefit calculations.

There are two primary types of RTI submissions:

Full Payment Submission (FPS)

• Sent to HMRC every time an employer processes payroll
• Includes details of employee pay, tax deductions, and National Insurance contributions
• Also reports workplace pension contributions, student loan repayments, and statutory payments such as maternity pay or sick pay

Employer Payment Summary (EPS)

• Submitted when an employer needs to adjust payroll data after an FPS has been sent
• Used to report reductions for statutory payments or claim reliefs

Employers must submit payroll data to HMRC on or before the time they pay their employees. Failure to comply may result in penalties.

After the financial year has closed on 31st March, companies have until 19th April to make and submissions or corrections to the previous year. If this is not possible, after 19th April, they can use an Earlier Year Update (EYU) return to make such amendments.

What information must be included in an RTI submission?

To comply with RTI submission requirements, each report must contain:

• Employee personal details, including name, National Insurance number, and date of birth. Address details are only required for new employees on their first return
• Payroll details, such as payment date and frequency
• Gross pay and net pay figures
• Tax deductions and National Insurance contributions
• Statutory payments, including maternity, paternity, and sick pay
• Student loan repayments (if applicable)
• Workplace pension contributions, where relevant

Employers must ensure payroll information is accurate and up to date to avoid errors in taxation and employee benefits.

Why was RTI introduced?

RTI was introduced by the UK government in April 2013. The previous system required employers to submit payroll data at the end of each tax year, often leading to incorrect tax codes and delays in benefit calculations. Real Time Information (RTI) was implemented to:

• Reduce discrepancies in tax deductions and contributions
• Improve the accuracy of monthly Universal Credit calculations by using timely earnings data
• Streamline payroll administration and compliance
• Support HMRC in detecting fraud or underreported income

Since its introduction, RTI has evolved to address employer concerns. Key changes include:

• Late filing grace periods to support small businesses
• Integration of RTI data with Universal Credit, improving benefit calculations
• Enhanced payroll software features to automate compliance

These updates have made RTI compliance easier for businesses of all sizes.

How does RTI benefit employees?

RTI notifies HMRC every time an employee is paid, ensuring tax codes remain accurate. This reduces the likelihood of tax underpayment or overpayment, which can cause financial stress.

Real-time reporting also helps employees who receive Universal Credit, as their benefits are adjusted based on up-to-date earnings data.

Additionally, RTI minimizes the risk of unexpected tax bills or refunds at the end of the tax year. It allows for more granular financial planning and improves payroll efficiency.

Challenges of implementing RTI

While RTI simplifies payroll compliance, employers tend to face several challenges, such as:

• Ensuring their payroll software is RTI-compliant
• Submitting payroll information on or before payday
• Avoiding data errors, which could lead to discrepancies with HMRC
• Managing late or missed submissions, which could result in penalties
• Handling complex payroll schedules, especially for zero-hour contract workers

To overcome these challenges, employers should use RTI-compatible payroll software and train HR and payroll staff on compliance best practices.

Penalties for non-compliance

HMRC enforces penalties for late RTI submissions, incorrect information, or failure to meet RTI employers' obligations. Penalties are based on company size:

• 1-9 employees: £100 per late filing
• 10-49 employees: £200 per late filing
• 50-249 employees: £300 per late filing
• 250+ employees: £400 per late filing

Additionally, failing to submit to HMRC the correct tax and National Insurance amounts on time may result in interest charges or further fines. To avoid penalties, businesses should regularly audit RTI submissions and ensure that payroll data is accurate.

For a deeper understanding of UK payroll compliance, check out Deel’s Guide to Payroll in the UK.

RTI for remote and global workers

RTI returns must still be submitted for workers subject to UK tax laws, wherever they work within the UK or elsewhere. Companies must also navigate foreign tax regulations.

Employers handling international payroll should consider global payroll solutions that automate compliance across multiple jurisdictions.

The role of payroll software in RTI compliance

Employers must use RTI-compliant payroll software to automate FPS and EPS submissions, reducing errors and ensuring timely reports.

Reliable payroll software helps businesses:

• Ensure tax deductions and National Insurance contributions are calculated correctly
• Track statutory payments such as sick pay or maternity leave
• Maintain compliance with RTI submission deadlines
• Manage payroll complexities for RTI employers hiring across borders

Employers looking to simplify payroll compliance should explore Deel Global Payroll for automated, RTI-compatible payroll solutions.

Trends in global real-time payroll reporting

RTI reflects a broader shift toward real-time payroll reporting, a trend that is expanding globally. Australia, for example, has adopted Single Touch Payroll (STP), a similar system.

While real-time tax reporting improves accuracy and transparency, some businesses argue that it places a higher administrative burden on small employers. Future discussions may focus on whether governments should offer more support to ease compliance for smaller businesses.

For companies hiring internationally, the challenge lies in managing compliance across multiple real-time payroll systems. Employers should consider using payroll platforms that handle multi-jurisdictional compliance, such as Deel’s global hiring solutions.