What do I need to do to get started?
Under RTI, payroll reports can no longer be sent to HMRC manually unless your circumstances fall within one of the very limited exceptions as explained in our section on paper filing. You must therefore ensure you have some RTI compatible software in place for submitting electronic returns to HMRC.
There are several options to help you do this, including some free software.
First things first though – before making any RTI submissions using your software, you will need to have registered as an employer with HMRC and enrolled to use PAYE for Employers Online services.
It goes without saying that you will need to have a reliable internet connection so that the payroll software can send your reports to HMRC as and when required. (Please note that if you do not have a reliable internet connection then you may have grounds to use paper filing under the ‘unable to online file’ exemption.)
You may feel nervous about entrusting an important task like payroll to free software, but many companies launch free basic products as a way to promote their more advanced products.
You can check HMRC’s list of suppliers of free commercial PAYE software for some options that are suitable for RTI online filing (although see some caveats with regard to HMRC’s PAYE Recognition Scheme in the section ‘paid software’ below).
In addition, there is HMRC’s Basic PAYE Tools (BPT) – this is a free tool provided by HMRC.
All free payroll software should help you with tasks like:
- recording your employees’ details
- working out your employees’ pay and deductions
- reporting payroll information to HMRC
- working out how much you need to pay HMRC
- calculating statutory pay, e.g. maternity or sick pay
However, that is where the similarities end. Some, like BPT have to be installed on your home computer. Others work in a similar way to online banking meaning you will be able to access it from any computer and not just your home one. Most provide payslips (although perhaps only electronically), however a few do not (BPT is one of these, however we have a payslip tool which does this instead).
If you are an employer with auto enrolment obligations, you should check for auto enrolment functionality too (i.e. recording pension deductions and making pension payments) if you think this will help you fulfil your duties. (The Pensions Regulator have a ‘basic assessment tool’ to help those whose software does not include auto enrolment functionality (in particular BPT users), however, as its name suggests, it is very basic.)
Essentially, you should think about the features that you need and choose payroll software to meet them. Some other considerations may be:
- Does the payroll software support the pay period you want to use (it is our understanding that some do not currently work with 4 weekly pay periods for example)
- Will it allow you to pay different people over different periods (e.g. both weekly and monthly) if necessary?
- Will you get free support? Some providers have payroll experts available via phone or email, ready to respond to any issues, questions, comments or feedback you may have.
- Does the software allow you to do things like send an Employer Payment Summary, check a new employee’s National Insurance number (NVR) or send an earlier year update (EYU)? (Please note that if you have payroll software that does not have the facility to send an EPS, NVR or EYU, then you should be able use Basic PAYE Tools alongside it to do this.)
Paid for commercial software will usually provide you with a complete payroll package for any number of employees, whereas free software is sometimes quite limited in terms of functionality and number of employees.
There are many products available and the GOV.UK website has a list of software products that have been tested and recognised by HMRC. HMRC list the software products in alphabetical order and update the list regularly. They do not recommend one product over another and will not be responsible for any loss, damage, expenses or cost that arises from you using software mentioned on their site.
Features vary from package to package so it’s important that you choose the one with the functions that you require. However by using accredited HMRC software you can at least be reassured that they have various general levels of functionality and can submit your payroll information online and in real time.
HMRC can offer no information as to the PAYE software and security – if you have any questions about security, you should take this up directly with the supplier.