Real-Time Information (RTI) improves the operation of the PAYE accountants system by creating more up-to-date taxpayer records and making the system easier for employers and HMRC to administer.
Reasons for introducing RTI
When PAYE was introduced almost 70 years ago, most people held just one job for most of their life and employers sent us pay and tax information annually. Today, employers still send information to HMRC annually, but many people change jobs more frequently, or have multiple employments or pensions, making it more difficult for HMRC to keep their records data up-to-date.
HMRC also needs up-to-date information about employment and pension income so the Department for Work and Pensions can adjust claimants’ Universal Credits awards.
Under RTI, employers and pension providers send information to HMRC each time they pay their employees; therefore HMRC will be able to keep more accurate records and, over time, more people will pay the correct tax.
RTI will hopefully reduce administrative burdens on business in future years as employers will no longer need to submit a separate end-of-year statement. HMRC will not require forms P35 and P14, and also forms P45 & P46 will no longer need to be sent to HMRC, instead information will be sent through RTI return. However employees will still be provided P45 which may change once RTI is fully functional. Also, P60 year-end certificate for expenses and benefits will remain same as before.
For more information please follow the link http://www.hmrc.gov.uk/payerti/index.htm