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RTI Submissions: What You Need to Know
Limited companies are required by law to make RTI (real time information) submissions to HMRC on a regular basis, detailing salaries, PAYE and NI. As a freelancer or contractor running a director-only company, this may seem like an unnecessary burden, but fail to keep up with RTI submissions and you could face penalties.
However, RTI doesn’t need to be a headache. Bright Ideas Accountancy are here to tell you everything you need to know, and how to simplify your submissions to take a weight off your mind…
What are RTI submissions?
In April 2013, the government brought in new legislation to make PAYE submissions more accurate and efficient. It was designed to solve the common issues of over- and underpayment, and prevent fraud in limited companies.
As the owner of a limited company, you need to make RTI submissions along with your PAYE information, every time you withdraw funds from the business. So if you’re on a monthly payroll, you’ll need to send your RTI on or before the day you get paid.
Failing to submit this information can lead to penalties. Contractors and freelancers operating under limited companies fall under the micro business category, meaning the threat of this penalty amounts to £100 per month.
How to submit your RTI
It may sound scary, but RTI submissions really aren’t as bad as they sound – if you have the right support, that is. Your Full Payment Submission (FPS) form can be sent electronically to HMRC, detailing how much you have been paid, and outlining deductions such as tax and National Insurance.
In fact, you don’t even need to fill out a form. By choosing the right accounting and payroll software, your RTI can be filed automatically based on the payroll details saved in your account. So you don’t have to spend time filling out a form each month to send HMRC, and that’s surely a good thing.
Getting your RTI sorted
However, not all payroll software operates on equal grounds. Besides, there’s rarely a one-size-fits-all solution for a freelancer or contractor, which is why it’s a smart idea to consult a specialist accountant when incorporating your business.
Bright Ideas Accountancy can help you make the switch to payroll if you’re currently a sole trader or operating under an umbrella company, ensuring you avoid those pesky penalties from the beginning. We recommend FreeAgent for our clients, as a simple and effective way to manage your bookkeeping.
It’s easy to get caught up in the finer details of tax and accounting, but the benefits of incorporating your business far outweigh the negatives. Whether you’ve just set up your limited company or you’re thinking of making the switch, Bright Ideas Accountancy can help.
To have a chat with our friendly contractor accountants, call 0161 669 4221 or email info@biaccountancy.com today. We would be happy to answer any questions you have about RTI submissions, limited companies or dealing with HMRC.