RTI Payroll Guide: Real Time Information in Plain English

RTI Payroll Guide means understanding one central rule: under PAYE Real Time Information, employers usually report payroll data to HMRC on or before employees are paid.

This guide explains what the rule means in practice, where the main legal and payroll risks sit, and what employers should do now. It is written for UK SME owners, HR managers and payroll administrators who need a clear operational answer rather than a theory-heavy overview.

What is RTI in payroll

Real Time Information is the PAYE reporting system that requires employers to send pay and deduction details to HMRC during the tax year rather than only at year end. The main return is the Full Payment Submission (FPS), which reports pay, tax, NIC and related details when employees are paid.

For many small businesses, RTI is the point where payroll shifts from an internal admin task to a regulated filing process.

What should employers review first?

Start with the basics:

• contracts and policy wording
• payroll and benefit settings
• manager guidance and escalation routes
• record keeping and audit trails
• any group of workers with irregular hours, lower pay or higher legal risk

Then test a real sample of records rather than assuming the written policy matches day-to-day practice.

What is the difference between an FPS and an EPS

An FPS reports employees' pay details. An Employer Payment Summary (EPS) is used for certain adjustments, reclaim information and special notifications, including some year-end indicators. Understanding the distinction prevents two common mistakes: filing the wrong return and assuming the payroll software handled everything automatically.

A business can pay staff correctly and still be non-compliant if the wrong RTI submission is sent.

Where do employers usually go wrong?

Employers usually run into trouble when they rely on outdated documents, inconsistent manager decisions or poor records. A process can look fine on paper and still fail in practice if payroll, HR and line management are working from different assumptions. The HMRC payroll penalties guide and the how to run payroll UK small business guide are useful supporting reads when building a fuller compliance workflow.

What are the biggest RTI mistakes employers make

The biggest mistakes are late FPS submissions, incorrect payment dates, duplicate records, bad starter information and failing to correct errors promptly. RTI compliance depends on data quality as much as payroll timing.

The simplest fix is a written payroll process with responsibility, review and submission evidence each cycle.

What should a practical employer action plan include?

A practical action plan should do five things. First, identify the legal trigger and whether it has already started or is only announced for a later commencement date. Second, update written documents so contracts, policies and letters match the current rule. Third, make sure payroll and HR systems reflect the change. Fourth, brief managers so they do not improvise. Fifth, keep an evidence trail of what was reviewed and when.

For SMEs, the best action plans are specific. They name the process owner, the software setting, the affected employee group and the deadline. Broad intentions such as "review policy" rarely survive contact with a live grievance, payroll query or HMRC check.

Which documents and systems should employers update?

Most employers need to touch more systems than they first expect. As a minimum, review:

• offer letters and employment contracts
• staff handbook wording
• payroll software settings and pay elements
• pension and benefit workflows
• sickness, disciplinary or grievance templates where relevant
• manager training notes
• onboarding and leaver checklists
• internal escalation routes for complex cases

A joined-up update prevents one team from fixing the headline issue while another team carries on using the old process.

Compliance checklist or practical steps

Use this checklist as a working plan:

• confirm the current legal position and commencement date
• identify the affected worker groups and managers
• review contracts, policies and template letters
• update payroll, pension or benefit settings where relevant
• test one real or sample case end to end
• brief managers on what to do and what not to do
• store evidence of the review and sign-off
• schedule a follow-up audit after the next payroll or live case
• link related guidance and tools inside your HR system for quick access

Frequently asked questions

Key takeaways

The safest employer response is to treat RTI Payroll Guide as an operational change, not just a legal update. Review your documents, test your payroll or HR workflow, and train managers before the next real case arrives. For related guidance, see the PAYE year end checklist 2026 and the P60 deadline 2026 guide. Use the PAYE calculator 2026/27 to check pay and deduction figures before each FPS submission.