RTI is an HMRC scheme to automate submission of pay and deductions every time an employee is paid electronically by BACS. This will allow HMRC to hold real-time tax accounts for individuals to create more accurate tax codes, tax credits, benefits, pensions and NICs, and reduce the need for P45s and P46 and reliance on year-end reporting.
HMRC has also confirmed that there will be extensive consultation with employers, payroll professionals and payroll software providers. To ensure that payroll systems work effectively with RTI, voluntary pilots will also be run later in 2012.
One standard BACS specification will be created after HMRC took into account the concerns raised by payroll software providers. This should come as positive news to many payroll professionals due to RTI using the BACS system to collect data.
It is strongly believed that the move to RTI will make the tax system more accurate in dealing with the correct tax code. This news will also have an impact on the “one tax system” which was proposed by Chancellor George Osbourne in the recent budget.
Further guidance on RTI can be found on the HM Revenue & Customs website: http://www.hmrc.gov.uk/rti/index.htm.