Since 2013, employers must tell HMRC about every payment to staff as it happens, not once a year. That is RTI, and it underpins your tax code, Universal Credit and more.
Before 2013, employers told HMRC about their staff's pay just once a year, in a giant end-of-year return. RTI changed everything. Now every payday is reported as it happens, feeding live data into tax codes, the benefits system and HMRC's records. If you are an employer, RTI is the backbone of compliant payroll; if you are an employee, it is why your tax position stays broadly accurate all year.
Under the old system, HMRC only learned the full picture of someone's pay once a year, which made tax codes slow to correct and benefits hard to assess accurately. RTI, introduced in April 2013, fixed this by making reporting continuous. Every payment to an employee is now reported in real time, so HMRC's records are always close to current.
This live data does more than calculate tax. It powers Universal Credit: the Department for Work and Pensions reads RTI feeds to adjust claimants' awards based on their actual earnings each month. An incorrect RTI submission can therefore knock someone's benefits as well as their tax.
RTI is built on the PAYE system. Each pay run, the employer's payroll software produces and sends two possible submissions:
The employer then pays the tax and National Insurance it has collected to HMRC, usually by the 22nd of the following month if paying electronically.
Bright Ideas Ltd has three employees and pays them on the 28th of each month. For May 2026 the company runs payroll on the 26th and submits its FPS that day, before payday.
| Employee | Gross pay | PAYE tax | Employee NI |
|---|---|---|---|
| Employee A | £2,500 | £318.50 | £140.40 |
| Employee B | £1,800 | £178.50 | £84.40 |
| Employee C | £1,200 | £18.50 | £24.40 |
| Totals | £5,500 | £515.50 | £249.20 |
The FPS reports all of this to HMRC on or before 28 May. Bright Ideas then pays the £515.50 income tax plus the National Insurance (employee and employer) to HMRC by 22 June. Because the FPS arrived on time and was accurate, each employee's tax code stays correct and any Universal Credit claims are assessed on the right earnings.
The golden rule is that the FPS must reach HMRC on or before the payday. Miss it, and HMRC can charge an automatic late-filing penalty scaled by the number of employees, with the first default in a tax year usually forgiven. Repeated lateness escalates the fines, and tax paid late can attract interest. Beyond money, late or inaccurate RTI ripples outward: employees can end up on the wrong tax code or see their Universal Credit miscalculated, which is why timely, accurate submissions are central to good payroll practice.
RTI turned payroll from an annual confession into a running commentary. Every payday, HMRC and the benefits system hear about it before the money even lands.
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