If you run a business and pay people through PAYE, you’re already using RTI — Real Time Information — whether you know it by that name or not. It’s the system HMRC uses to collect payroll data from employers, and since its introduction it has fundamentally changed how and when that information flows.

The core idea is straightforward: rather than reporting payroll details to HMRC once a year after the event, you report on or before every single payday. In practice, that means submitting a Full Payment Submission (FPS) each time you pay your employees. Miss a submission or get the timing wrong and you’re likely to hear from HMRC fairly quickly.

In 2026, RTI became even more significant for employers who provide benefits in kind. Understanding what the system requires — and where the recent changes sit — is the kind of thing that’s easy to overlook until it becomes a problem.

RTI stands for Real Time Information, and it’s the framework HMRC uses to receive PAYE data from employers. Before it was introduced, employers submitted a single annual return — the P35 — summarising what had been paid and deducted across the year. RTI replaced that with continuous, real-time reporting tied directly to each payroll run.

There are two main submission types under RTI:

• Full Payment Submission (FPS): sent on or before the date you pay your employees. It tells HMRC how much each employee was paid and how much Income Tax and National Insurance was deducted. This is the submission most employers are familiar with.
• Employer Payment Summary (EPS): used to tell HMRC about adjustments — for example, if you’ve claimed statutory pay recoveries or if you haven’t paid anyone in a particular tax month. It also carries your end-of-year declarations.

Most payroll software handles the submission process automatically, but the employer is responsible for making sure submissions are accurate and on time. A late or incorrect FPS can trigger penalty notices and — more frustratingly — cause employees’ tax codes to go wrong, which creates its own headaches to unwind.

The FPS is the workhorse of RTI. Every time you run payroll, the submission needs to include the following for each employee paid in that period:

• Name, National Insurance number, and PAYE reference
• Gross pay and the payment date
• Income Tax deducted
• Employee and employer National Insurance contributions
• Any statutory payments such as SSP or SMP
• Year-to-date figures for each of the above

The year-to-date figures are important — HMRC uses them to reconcile what it expects against what’s actually been deducted, which is what powers employees’ real-time tax accounts and keeps their tax codes current throughout the year.

If you correct a previous submission, you don’t file an amended FPS for an old period. Instead, you correct the year-to-date figures on the next FPS and, where required, submit an Earlier Year Update (EYU) or amended FPS after the tax year has closed. Getting this right matters: HMRC’s systems flag discrepancies automatically, and unexplained variances can prompt compliance checks.

In our experience, the most common errors we see when clients come to us are late FPS submissions, mismatched National Insurance numbers, and year-to-date figures that have drifted out of alignment after a payroll correction. All fixable — but cleaner to avoid in the first place.

From 6 April 2026, the way most benefits in kind are reported to HMRC changed significantly. Until this point, employers reported benefits — company cars, private medical insurance, gym memberships, and so on — via a P11D at the end of the tax year, with Class 1A NICs due separately. That annual return approach meant employees often had their Income Tax on benefits collected in arrears through an adjusted tax code the following year.

Under the new rules, most benefits in kind must now be reported and taxed in real-time through the FPS — the same submission used for salary. This is called mandatory payrolling of benefits, and it applies to the majority of benefits from the start of the 2026–27 tax year. Two exceptions — employment-related loans and employer-provided accommodation — are not yet mandated but can be reported voluntarily through the FPS from April 2026.

The practical effect is that employees’ Income Tax on benefits is now collected as it arises, rather than a year later. HMRC estimates this change affects around four million employees and will remove the need for four million end-of-year P11D returns annually.

For employers, this means your payroll process needs to carry benefit values each pay period. If you’ve been relying on P11Ds as an end-of-year exercise, the workflow has fundamentally changed. It’s worth reviewing your payroll setup — and your payroll provider — to confirm everything is correctly configured.

RTI is largely invisible when it’s working. It becomes very visible when it isn’t. Here are the situations we most commonly help employer clients work through:

Late FPS submissions

HMRC’s late filing penalties were paused for a period but are now actively enforced for many employers. The penalty regime scales with the number of employees, but the administrative hassle of correcting HMRC’s view of your position is often the bigger cost. Submissions must reach HMRC on or before the payment date — not the day after.

New starters and leavers not handled correctly

New starter declarations need to be included on the first FPS for that employee. Leavers need a leaving date on the final FPS that covers their last payment. Both are easy to miss in a busy payroll run, and both cause downstream problems for the employee’s tax record.

Director payroll not aligned to RTI

Directors who take an annual salary in a single payment — a common approach in owner-managed businesses — still need a correctly submitted FPS. We see cases where director payroll has been run informally for years with no RTI submissions, which creates a significant compliance exposure if HMRC looks closely.

None of these are catastrophic if caught early, but they’re all avoidable with a properly managed payroll process.