RTI — Real Time Information — is the system HMRC uses to collect payroll data from employers. Every time you pay a member of staff, you’re required to tell HMRC about it on or before the payment date. Not monthly. Not at year-end. Every single pay run, in real time.

Most business owners know RTI exists, but the details often get lost in the day-to-day of running a business. The result is late submissions, data errors, and — in some cases — unexpected penalties. We see it regularly, and almost all of it is avoidable with a clear understanding of what’s actually required.

This post covers the practical side of RTI: what you’re submitting, when, what happens if you miss a deadline, and the accuracy issues that cause the most headaches for both employers and their employees.

Under RTI legislation, employers must report payroll information to HMRC on or before the date employees are paid. That means if payday is a Friday, the submission should reach HMRC by that Friday — not the following Monday, not at the end of the month.

The main submission you’ll make each pay run is a Full Payment Submission (FPS). This tells HMRC who you’ve paid, how much, and what deductions (tax, National Insurance, student loan, pension) you’ve made. It’s the backbone of the RTI system.

You may also need to submit an Employer Payment Summary (EPS) in certain circumstances — for example, if you haven’t paid anyone in a particular tax month, or if you’re claiming a statutory payment reduction. The EPS is also how you tell HMRC your final submission for the tax year.

One thing worth knowing: the old Earlier Year Update (EYU) submission — once used to correct prior-year payroll — was withdrawn from April 2021. Since then, corrections to 2020-21 onwards must be made through a further FPS with updated year-to-date figures. The good news is that these corrective FPS submissions don’t attract a penalty, because there’s no statutory filing date attached to them.

RTI filing penalties were introduced in stages: from October 2014 for employers with 50 or more employees, and from March 2015 for those with 49 or fewer. They apply under Schedule 55 of the Finance Act 2009, and they are charged automatically — HMRC doesn’t need to make a discretionary decision to issue them.

Penalties are based on the number of employees on your PAYE scheme and how late the submission is. The more employees you have, the higher the monthly penalty for a late FPS:

• 1–9 employees: £100 per month
• 10–49 employees: £200 per month
• 50–249 employees: £300 per month
• 250 or more employees: £400 per month

There’s also an additional penalty if the FPS is more than three months late — a further charge of 5% of the tax and NIC that should have been reported.

In our experience, most small employer penalties come from payroll being run but the submission being forgotten or delayed — often because the software wasn’t set up correctly, or someone assumed their bookkeeper had handled it. The penalty itself might feel manageable for one month, but they accumulate, and by the time HMRC writes to you, it’s often several months’ worth.

Late submissions get the most attention, but in practice, inaccurate RTI data can cause just as much trouble — sometimes more. HMRC uses your FPS submissions to build a picture of each employee’s tax position. If the figures you submit don’t match reality, the consequences ripple outward.

Employees can end up on the wrong tax code, receiving incorrect refunds, or — worse — accumulating an underpayment that HMRC chases them for later. We’ve seen situations where a payroll error meant an employee received a large tax refund they weren’t entitled to, only to be asked to repay it months later. That’s not a pleasant conversation for anyone.

Common accuracy issues we see include:

• Incorrect National Insurance numbers (or missing ones for new starters)
• Year-to-date figures that don’t accumulate correctly — often caused by switching payroll software mid-year
• Wrong tax codes applied at the start of employment
• Directors’ pay structures being reported incorrectly
• CIS deductions not being reflected properly where subcontractors are involved

The CIPP — the professional body for payroll — has highlighted data accuracy as a systemic concern within the RTI framework. It’s not just a small-business problem. But for small employers without a dedicated payroll function, the margin for error is higher.

For most small businesses — a limited company paying a director and perhaps one or two employees — RTI should be straightforward. But straightforward doesn’t mean automatic. The most common mistake is treating payroll as something to sort out after the fact, rather than a process that runs to a fixed timetable.

A few practical points worth noting:

Don’t run payroll late and back-date it

If you pay yourself or your staff on the 25th, the FPS needs to go in by the 25th. Running the payroll on the 28th and using a payment date of the 25th creates a discrepancy that HMRC’s systems will flag.

New starters need to be set up correctly from day one

If a new employee doesn’t have a P45, you need to use a starter declaration to establish the right tax code. Getting this wrong at the start tends to unravel throughout the year.

Watch the tax month boundaries

The PAYE tax month runs from the 6th to the 5th, not calendar month to month. If your pay date falls near the 5th or 6th, it’s easy to submit into the wrong tax month — which can trigger a penalty notice even if the submission itself was on time relative to your intended pay date.

HMRC published updated RTI technical specifications for the 2026-2027 tax year, with the live service running from March 2026. If you’re using payroll software, make sure it’s been updated accordingly — most reputable providers handle this automatically, but it’s worth confirming.