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How do companies benefit from Real Time Information?

Real Time Information, or RTI, is a new digital system being introduced to make sure vital information – about tax, national insurance and other contributions that may be due – is made available to HMRC either at the time payments are submitted or before. This will mean that companies no longer need to complete a tax return at the end of each year. The advantages of RTI for HMRC include lower costs associated with administering the PAYE system, but what are the benefits for companies?

One advantage of RTI is that it should simplify a company’s PAYE system, making administration easier instead of leaving business owners scrambling at the end of the year to provide the tax information HMRC requires. Once the RTI system is put in place, it will use special software to regularly send up-to-date information to HMRC via the internet as part of the company’s payroll procedure.

Once the initial system has been paid for, the process should become relatively cheap to use over the long run. It should free up administrative staff at the end of each tax year, a period which can be a busy one for some companies.

A survey by HM Treasury revealed that more than 90 percent of employers trialling RTI found that the few tasks which remained at the end of each tax year – such as providing P60s for employees – took up less time than previous year-end procedures, making administering tax affairs much more efficient

RTI should ensure individual employees experience a more accurate PAYE system, with fewer cases of under or over payment of tax and fewer incorrect tax codes, making the process of employing staff much more streamlined.

While the tax credits system is still in place, the introduction of RTI is expected to lead to fewer errors and it is also expected to make life easier when Universal Credit is introduced.

Posted by Mark
September 1, 2014
Features

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