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Glossary of PAYE RTI Terms

The following key phrases and abbreviations provide a useful guide to the technical operation of PAYE RTI.

For further information please contact your accountant or payroll provider.

BACS (or direct BACS/RTI BACS)

Refers to the UK's bank payment network and - in the context of PAYE RTI - HMRC use it to refer to employer payments to their employees by BACS using the employer’s own BACS Service User Number (SUN). Employer salary payments by RTI BACS – unlike normal Internet Banking payments – use two references not one. The second BACS payment reference is a unique code generated by the employer’s RTI payroll software also present in the employer’s Full Payment Submission to HMRC. This code is known as a BACS hash code. Use of direct BACS allows the employer to demonstrate they have processed their payroll in accordance with their PAYE RTI obligations because their BACS payment instructions contain the hash code generated by their payroll software at the same time they processed their FPS. Hash codes are unique and cross reference every individual employee's actual bank payment with their RTI earnings data, reported by their employer. All direct BACS payment instructions are electronically receipted by the BACS network. 

BACS hash code

A BACS hash code is a unique code, generated by employer payroll software every time payroll is run, present in both the FPS and direct BACS payment instructions for that pay period. The BACS hash code changes for every pay period. All employers who choose to pay employees by BACS must include the BACS hash code cross reference if part or all the payments reported in their FPS are paid by direct BACS. BACS hash codes enable HMRC to cross reference the payments by BACS with the amounts reported on each FPS, because PAYE RTI requires the BACS network to pass all employer hash code data and payment information to HMRC after BACS has processed the live payment instructions.

Basic PAYE Tools

HMRC's own RTI payroll software programme available free to employers with 9 or fewer employees, which is downloadable from HMRC's website and runs as a stand-alone programme on a local Personal Computer.

CA5403

The electronic (email) form to request confirmation from HMRC of an existing, previously issued National Insurance Number, available from HMRC's website.

CA6855

The paper form, to be sent by letter post, to request HMRC trace an employee’s National Insurance Number. It is downloadable from HMRC’s website as a PDF file.

Employee personal data

The use of precise employee personal information is central to the efficient operation of RTI because under PAYE RTI payroll information will be exchanged and used by HMRC in real time. The following employee personal information must be available to an employer and provided to HMRC as part of an employer’s Full Payment Submission: National Insurance Number, Title, Surname, Full Name or initials, Date of Birth (DOB), Gender, Address and UK Postcode (in addition to the employer’s pay and payment information for each employee).

EAS

See - Employer Alignment Submission

Employer Alignment Submission (EAS)

If requested by HMRC an EAS may be required in advance of an employer’s Full Payment Submission. EAS typically applies to employers with more than 250 employees or complex payroll arrangements, such as a ‘split’ PAYE scheme, with more than one payroll provider or pay cycle (e.g. both weekly and monthly pay cycles for different employees of the same employer). EAS is part of the process by which an employer’s payroll information is aligned with HMRC’s own records.

EAS can only be submitted once – as soon as possible following receipt of HMRC’s letter. HMRC do not allow any amendments to an EAS once submitted, except that employers operating a ‘split’ PAYE scheme may be allowed to make multiple submissions but only after April 2013.

Employer Information

The information by which HMRC identify an employer, made up of 3 key pieces of information: The employer’s HMRC office number, employer’s PAYE reference number and employer’s HMRC Accounts Office reference number (used to reference an employer’s payments to HMRC).

ER & EE

Accountants and payroll providers often use the abbreviations ‘ER’ and ‘EE’ to designate respectively “Employer(s)” and “Employee(s)”.

EPS

See - Employer Payment Summary

Employer Payment Summary (EPS)

Is an additional submission an employer may make to HMRC to report a reduction in the amount due to HMRC, or to notify no employees were paid in a pay period. HMRC does not require employers to notify their liability to make PAYE and National Insurance payments to HMRC because this information is already known to HMRC as a result of an employer’s FPS submission.

EYU

See - Earlier Year Update

Earlier Year Update (EYU)

An additional submission used to correct after 19 April any of the year to date totals submitted in an employer’s final FPS for the previous tax year.

FPS

See - Full Payment Submission

Full Payment Submission (FPS)

Full Payment Submission is the term HMRC use to refer to an employer’s PAYE RTI submission. It is in effect the electronic return an employer makes to HMRC every time they operate payroll and pay their employees under PAYE RTI. FPS refers therefore to the employer's RTI internet return which is generated by their payroll software and submitted to HMRC via the Government Gateway.

However, an employer's first FPS may contain additional employee payroll information it does not need to include on its subsequent FPS returns. For example employees on the payroll but who have not been paid yet in the tax year, such as staff on maternity leave or who receive irregular payments.

Government Gateway

Refers to the UK Government website for the provison of online government services. It is the single point of entry for access to all individual and business data transactions with government. HMRC's implementation of RTI relies on the Government Gateway to receive and receipt all RTI FPS returns received over the internet from employers' payroll software. RTI reporting via the Government Gateway can only be carried out from HMRC approved RTI payroll software. There is no manual interface for keying RTI data.

Internet Banking

Internet Banking is often also referred to as "BACS" - to mean an electronic payment. Internet Banking salary and wages payments to employees do not support the use of the RTI BACS hash. The BACS hash relies on the use of an employer BACS Service User Number, which is part of the employer's electronic banking arrangements and sponsored by their bank. See - direct BACS / RTI BACS

NINO

Often used in payroll and tax information, NINO, simply refers to (an employee's) National Insurance Number. All UK National Insurance Numbers are 9 characters long and follow the format, 2 letter (alpha) characters, followed by 6 number (numeric) characters, followed by one final letter character at the end, and are typically written in the form: AB 12 34 56 C.

NVR

See - National Insurance Number Verification Request

National Insurance Number Verification Request (NVR)

Refers to an employer’s formal request to verify or obtain a National Insurance Number (NINO) for an individual employee.

On or before

'On or before' refers to the rule that requires employers to submit their RTI return (FPS) to HMRC at the same time, or before, they pay net wages to their employees.

Payroll alignment

In most cases, for the majority of employers, there is no requirement to notify employee payroll data to HMRC, what HMRC calls payroll alignment, in advance of commencing PAYE RTI reporting using a Full Payment Submission (FPS). For the most part, employers are required to start submitting their Full Payment Submission from the date stipulated by HMRC to each employer in writing. The exception to this is the Employer Alignment Submission (EAS), a separate submission required in advance of the FPS for certain types of employer. However, even for employers that are not required to submit an EAS, payroll alignment is achieved by requiring all employers to submit a more comprehensive first FPS than is required in subsequent FPS submissions.

P45

The P45 leaver’s form – summarising the leaver’s pay position – is to continue although only as a form from the employer to the leaver. An employer communicates an employee’s departure to HMRC as part of their continuous RTI reporting using FPS, every time they run their payroll.

P46

HMRC's RTI new starter checklist form used to gather information about a new employee and can be used to help fill in the first Real Time Information Full Payment Submission (FPS) for an employee. Employers need to keep the information recorded on the starter checklist record for two years although the form is not sent to the Revenue but used for employer record keeping only. The form is available as a PDF download from HMRC's website.

PAYE RTI software

Refers to current payroll software and does not imply a separate, stand-alone, programme or piece of software specifically for PAYE RTI. ALL UK payroll software is being revised to accommodate PAYE RTI. PAYE RTI software therefore refers to an employer’s existing payroll software product or licence, except that existing payroll software has to be upgraded to the software provider’s RTI version to support RTI.

SUN

See - Service User Number

Service User Number (SUN)

A Service User Number (SUN) is an employer’s unique reference on the BACS payment network that identifies both their origination and termination of payments to employees. The use of a SUN indicates a direct BACS payment, as opposed to a normal Internet Banking payment that uses the BACS network only to terminate a payment.

Universal Credit
 

The programme of welfare reform that combines multiple benefits and social protections in a single monthly payment to claimants. The main point about UC is that its amount fluctuates according to the claimant's earnings and/or the earnings of their partner, reported to HMRC via RTI. A claimant's entitlements are assessed based on their personal circumstances and that of their partner: so their joint income is taken into account. A claimant’s entitlement to UC is assessed in a personal Claim Period that has no relation to their/their partner’s employer(s) payroll cycle: Only earnings reported by their/their partner's employer(s) in the Claim Period count towards the amount of their UC payment from DWP. Claimants are given a personal 'Work Allowance' (£111pm for an individual claimant) money they can keep even when working, to reward work. Incorrect or delayed RTI reporting or errors in RTI returns for any employees can cause financial loss to the employee's family or where the employee is a direct claimant themselves. Employers do not know which of their employees are affected directly or indirectly by Universal Credit.

Verification of payroll data

HMRC advocates employers rely on the following employee documents to verify personal employee data: Passport, Birth certificate, Full driving licence (photo version) or HMRC or DWP documentation.

Year-end / Annual returns

Under RTI the annual P35/ P14 (and P38A) declarations no longer apply because RTI means employers make an official declaration to HMRC every time they pay their staff.