PAYE compliance and RTI
Produced in partnership with Vaneeta Khurana of EY LLP
PAYE compliance and RTI

The following Tax guidance note Produced in partnership with Vaneeta Khurana of EY LLP provides comprehensive and up to date legal information covering:

  • PAYE compliance and RTI
  • RTI reporting
  • Commencement of RTI and first return
  • Monthly compliance
  • In-year compliance
  • Annual compliance
  • Forms no longer required under RTI
  • Notices of coding
  • Penalties and interest

The Pay As You Earn (PAYE) system relies on an array of reporting requirements, forms and compliance. Employers are required to report employee remuneration on both a monthly and an annual basis. In addition there are various in-year reporting requirements, such as for joiners, leavers and the provision of certain benefits.

Real time information (RTI) has applied to all employers and pension providers since October 2013. It replaced many of the previous rules associated with PAYE reporting and compliance.

This Practice Note provides an overview of the main compliance requirements associated with PAYE, and explains how these have been affected by RTI.

RTI reporting

Historically, the PAYE system posed a problem (for HMRC, and potentially for taxpayers too) in that HMRC did not know how much should have been collected from employees under PAYE until after the end of the relevant tax year. This was because employers only had to tell HMRC once per year (on form P35) how much they had paid to employees through their payroll. This form was submitted to HMRC after the year was over.

This meant that although HMRC had to tell employers, through the coding notice, how much to deduct under PAYE, it had to base this largely on information in the annual form P35, which would automatically be out of date as it related to the