What Is RTI and How Does It Affect Your Payroll?

If you employ anyone in the UK, you are already using RTI — whether or not you have ever heard the term. Real Time Information is the framework that sits underneath every payroll run, and it is the reason payroll deadlines are unforgiving in a way that most other tax obligations are not. Miss a Corporation Tax filing by a week and you pay a fixed penalty. Miss an RTI submission and you can trigger penalties, disrupt an employee's tax code, and affect their Universal Credit entitlement in the same month.

What RTI Actually Is

Real Time Information is the electronic system through which employers report payroll data to HMRC. It has been mandatory since April 2013, replacing the old model where employers reconciled everything once a year.

The principle is straightforward: rather than telling HMRC what you paid your staff after the tax year has ended, you tell them every single time you pay someone. HMRC therefore holds a running, current picture of every employee's earnings and deductions.

That real-time picture is not only used for tax. It feeds directly into the Universal Credit system, which calculates entitlement using the earnings data employers report. This is why late or incorrect submissions have consequences that reach well beyond your own PAYE account — an employee's benefit payment can be affected by an employer's filing error.

There is no paper option. RTI is submitted electronically through HMRC-recognised payroll software which is where we come in to help you stay compliant.

The Two Submissions You Need to Know

Almost all RTI activity comes down to two returns.

The Full Payment Submission (FPS) is sent every time you pay employees. It reports gross pay, income tax deducted, National Insurance contributions, student loan repayments, statutory payments, pension contributions, and starter and leaver information. The FPS is what creates your liability to HMRC for that period.

The Employer Payment Summary (EPS) is sent when you need to report something that reduces or adjusts that liability. Common reasons include reclaiming statutory payments such as maternity, paternity, adoption, shared parental, neonatal care, or parental bereavement pay; claiming the Employment Allowance; reporting CIS deductions suffered; or telling HMRC that you paid no employees at all in a given tax month.

A useful way to hold it in mind: the FPS creates the bill, the EPS reduces it. Both feed into HMRC's calculation of what you owe each month, and if the EPS reductions exceed the FPS liability, HMRC issues a credit or refund.

The Deadlines That Matter

The FPS must be submitted on or before the day you pay your employees. Not by the end of the week, not by month end — on or before payday. This is the single most important rule in RTI and the one most commonly broken, usually by employers who process payroll retrospectively.

The EPS is due by the 19th of the following tax month. Tax months run from the 6th to the 5th, so an EPS covering the month to 5 August is due by 19 August.

PAYE payment itself is due by the 22nd of the following month if paying electronically, or the 19th if paying by post. Employers whose average monthly PAYE and NI liability is under £1,500 can opt to pay quarterly — but note that this affects payment only. The FPS must still be filed on or before every payday regardless.

At year end, your final FPS or EPS must be marked as the final submission for the tax year and filed by 19 April. Failing to mark it correctly leaves HMRC expecting further submissions and can generate penalties for filings you never owed.

What Late Filing Costs

Penalties are automated and scale with the size of your payroll. Each tax month containing a late FPS counts as one default, and the charge runs from £100 for employers with up to nine employees to £400 for those with 250 or more.

There is one concession worth knowing: the first late FPS in a tax year does not attract a penalty. Every subsequent default does.

Beyond three months late, HMRC can add a further penalty of 5% of the tax and National Insurance due. Separate penalties apply to inaccurate submissions under the Finance Act inaccuracy rules, and interest accrues on late PAYE payments independently of any filing penalty.

Correcting Mistakes

Errors happen, and the correction method has changed from what many employers remember. The Earlier Year Update has been withdrawn. To correct figures from a previous tax year, you now submit an additional FPS showing the corrected year-to-date amounts. Within the current tax year, earlier periods are corrected the same way — an updated FPS with the right cumulative figures.

One practical warning: avoid sending multiple FPS submissions for the same pay date unless genuinely necessary. Duplicate submissions cause processing problems at

HMRC's end and often create more work than the original error.

What Is Coming Next

The mandatory payrolling of benefits in kind — which will require most taxable benefits to be reported through RTI rather than on a P11D — has been deferred and is now expected from April 2027.

That deferral is a useful breathing space rather than a reason to ignore it. Employers who currently report benefits annually will need to move them into the payroll cycle, which changes both the timing of the tax collected and the way benefits appear on employee payslips. Employers who start reviewing their benefits data now will have a considerably easier transition than those who wait.

Why RTI Makes Payroll Unforgiving

The defining feature of RTI is that it removes the safety net. Under the old annual system, an error made in June could be quietly corrected in the following April. Under RTI, every pay run is a filing, and every filing is checked against HMRC's records immediately.

That is exactly why payroll is such an awkward fit for a business where one person handles it alongside other duties. Holidays, illness, and staff turnover all create real filing risk, because the deadline does not move to accommodate them.

It is also worth being clear on one point: outsourcing payroll does not transfer legal responsibility. RTI compliance remains the employer's obligation even where a bureau makes the submissions. What outsourcing does provide is the resilience, expertise, and continuity to make sure those obligations are actually met.

How Crown Payroll Services Can Help

We handle RTI submissions for businesses across the UK and beyond — every FPS filed on or before payday, every EPS submitted on time, statutory reclaims properly captured, and year-end submissions correctly marked.

If your payroll currently depends on one person remembering, or if you have picked up penalties you were not expecting, we would be glad to help. Call us on 01942 644864 or email hello@crownpayrollservices.co.uk.