Is Your Business Real Time Ready?
Chances are, if you work in the areas of HR and payroll, that you will be aware of changes to the way and frequency with which payroll information is to be logged.
In the biggest shake up to the payroll system since its formation at the end of World War Two, new legislation will require businesses to log their payroll in Real Time. RTI (an acronym for Real Time Information) will mean that rather logging payroll data in bulk at the end of the year, payroll administrators will be required to log details every single time they pay an employee.
Given the import and significance of the changes, it is surprising to learn that the vast majority of SME businesses, or indeed businesses of varying sizes, are still confused, if not completely unaware of the changes to the payroll system..
Why change now?
There are a few reasons why the government felt it was time to update the system. Primarily, and most obviously, it’s old! At the time of its inception, most people held jobs posts for life, but in the 70 odd years that have since lapsed, it’s safe to say that lots of things have changed. The way we work has changed: now we are likely to have multiple jobs; more of us more part time, flexible hours, or freelance and change jobs with more frequency. The current system is ill equipped to accurately up to speed with all the changes that take place within our working lives.
It’s important to address the issue of accuracy, as in recent times, not having the correct information has led to costly mistakes: very costly mistakes. In the tax year 2010/2011 HMRC had to demand back over 3million pounds in tax repayments because of inaccuracies, as well has having to pay back disgruntled tax payers millions too. In order to avoid repetitions of this episode, now the RTI system will ensure greater levels of accuracy because NI and other tax information will have to be updated every time we are paid.
The changes are also in place to coincide with and supplement the shakeup to the UK tax system and the introduction of Universal Tax Credit. Information will now be centralised, so HMRC can keep up to date with information as it comes in, leaving less room for mistakes. The new system will also be faster and more efficient, so it’s essentially happy days for everyone!
What you need to do
Update Your Technology
In order to ensure that your organization is RTI ready the first thing that you will need to do is to make sure that your technology is entirely up to date: RTI works with cloud technology, and all information will need to be submitted to HMRC electronically. Lots of HR software companies such as Sage have been helping the government to test out the new system, to make sure it works. If you aren’t already working with cloud technology, then you’ll need to get your skates on to get this sorted!
Cloud technology is great for such a radical change: it’s the perfect medium to securely store mass amounts of information, but the new system also means information constantly being up to date and also having technology that is able to update itself too. The great thing about cloud software is that you can often trial run programs online for free, so shop around!
Make Sure Information is always Accurate
This new system has been created to leave as few margins of error as possible – all your information, down to spelling has to be updated and accurate or else the new system will not accept a submission from you: one simple mistake will see you having to re-enter all your data. As harrowing as that prospect sounds it’s a nightmare that can be easily avoided if you strengthen communications with your employees,
In order to achieve the above, you’ll also need to…
Tighten Internal Communications with your Team
In the same way that the communications between HMRC and businesses (well, the public at large) could be much stronger, the way that HR practitioners communicate information to their staff should be strengthened – it’s a massive priority to highlight the importance of the changes, the information that will be required from your staff, as well as significant deadlines: send reminders and bombard your team if you must!
Finally Kick Back and Enjoy the Efficiency
The system will be more efficient, much more timely and cost effective too. So that leaves you with extra time to play with!